₦airaland Forum

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Reports reaching Nairametrics suggest black market operators are currently buying dollars from speculators at a price of N210. They are in turn selling to Speculators at a price range of N215 to N220 depending on where you are buying from.

Some of the black market operators interviewed by Nairametrics also opine that the Naira is poised to strengthen further against Naira and see a price of N205/N210 in the horizon. They told us in broken English “if you wan buy dollar make you wait small because e go drop. Everybody dey rush to sell dollar quick quick because of the CBN.” Translated to If you want to buy dollars wait a bit more as the price will drop further. Everybody (Speculators) are rushing to sell dollars quickly due to CBN policies.

The Naira has strengthened in the last four days after the CBN pulled off another cat in the hat policy, albeit effective this time, restricting banks from accepting dollar cash deposits from their customers. The banks have also not been giving out PTA and BTA for travelers. Whilst this measure may have helped in reducing the exchange rate, it has also created arbitrage situation for sharp black market operators.

They know now that the Naira is King (at least for now) and as such speculators with no market use for the green back will have no choice but to sell to them at any price. However, those who need dollars for market reasons (like to import or travel on holiday) will have no choice but to buy at the price on offer.

No one knows how this back and forth will end with the CBN basically emptying its arsenal on trying to defend the Naira by all means. Whether it will rise or fall now depends on the next steps the CBN takes. For now Naira remains KING.


http://nairametrics.com/now-who-is-king-naira-trades-for-n210-with-the-price-expected-to-fall-even-lower/

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Seven Up Plc released its 2015 Q1 to June results showing pre-tax profits dropped 9.5% to N1.9billion (2014 Q1 N2.1billion.

The soft drink company’s profits was hurt mostly by a 14% increase in cost of sales which chopped 67% of revenue this quarter compared to 64% a year ago. Finance cost also rose 61% to N760m.

See summary of results below;



http://nairametrics.com/results-higher-costs-chops-off-7up-margins/

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Royal Dutch Shell PLC announced plans to slash 6,500 jobs Thursday amid a slump in oil prices that has sent a wave of job cuts rippling through the industry.
Shell’s job reductions came as Chevron Corp. said Wednesday it would cut 1,500 jobs, while U.K. utility Centrica PLC said Thursday it would slash 600 positions and work to shrink its oil-and-gas production division.
Even deeper cuts have emerged this week at oil services firms, which big energy companies are squeezing for savings; Saipem SpA of Italy, for instance, said it would slash 8,800 jobs over the next two years.
The moves demonstrate how energy companies are moving to slash further to cope with a sustained oil price collapse that they now see lasting for a longer time. Shell, BP PLC, France’s Total SAand Eni SpA of Italy have all outlined plans in their second quarter results to deepen spending cuts that began earlier this year when oil prices reached lows below $50 a barrel, down from highs of $114 a barrel last year.
Shell’s job cuts were announced along with second-quarter earnings that saw its profit fall by 33% from the same period last year, to $3.4 billion compared with $5.1 billion on a current cost of supplies basis—a measure similar to the net income reported in the U.S. As with its peers, Shell’s exploration and production, or upstream business, suffered worst, tumbling to $774 million, down nearly 80% from a year earlier.
Shell’s oil production fell 11% to 2.7 million barrels of oil equivalent as the company undertook maintenance at several fields and continued a $20 billion divestment program due to complete at the end of the year.
http://nairametrics.com/see-whos-laying-off-in-the-oil-industry/

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The CBN has released a new circular (Tuesday) updating banks on their earlier instruction to restrict daily usage of FX usage by individuals abroad. Earlier in the year, the CBN had asked that Banks restrict individuals to a daily withdrawal limit of $300 and annual of $50,000 whenever they use their ATM card to transact abroad.

Last week the CBN postponed the BVN registration exercise following a large turnout on the day of the earlier expiry date of June 30th, 2015. The CBN obviously sees the large turnout as an acceptance of its grand plan to perhaps track everything that you do. How? An example is what was contained in the circular it just issued.... More on
http://nairametrics.com/this-latest-cbn-circular-shows-how-they-will-use-bvn-to-track-your-every-move/

All capital market operators planning on mergers and acquisitions or any reclassification of their functions have July 31 to do so as their deadlines. this directive is from The Securities and Exchange Commission (SEC).

The July 4 directive also applies to capital market operators seeking to downsize from stockbroker to sub-broker, broker-dealer to either broker or dealer and from multiple functions to a single function, among others.

The directive, according to a source at the Commission, is part of the compliance and enforcement process as the apex capital market regulator prepares to enforce the September 31 deadline for the new minimum capital requirements for capital market operators.

It is common knowledge that some capital market operators have been considering mergers and acquisitions to stave off liquidation.

SEC in 2013 announced major increases in minimum capital requirements for capital market functions under a new minimum capital structure that was initially scheduled to take off by January 1, 2015. It however extended the deadline to September 30, 2015.

Minimum capital base for broker and dealer was increased by 329 per cent from the existing N70 million to N300 million. The broker, which currently operates with capital base of N40 million, will now be required to have N200 million, representing an increase of 400 per cent. Minimum capital base for the dealer increased by 233 per cent from N30 million to N100 million.

http://nairametrics.com/sec-names-firms-july-31-as-deadline-for-mergers-and-acquisitions/

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In re-assuring its support to help Nigeria in fighting all forms of corruption, the United States (US) Government has said that it would offer technical assistance and training for investigators and prosecutors on money laundering, pledging that it would ensure that no stolen funds were laundered through its banking system.
The US Ambassador to Nigeria, James Entwistle, who made this disclosure during his country’s 239th Independence Anniversary Celebration on Saturday in Abuja.
“As you fight corruption, we offer technical assistance, training for investigators and prosecutors, and a commitment to ensure that no stolen funds are laundered through our banking system. As you improve the business climate, we encourage trade and investment.

He stated that his country would support the growth of Nigerian power sector by assisting companies to build more electricity infrastructure, especially, environmentally-friendly power generation.
“As you continue privatisation of your power grid, through President Obama’s Power Africa initiative, we stand ready to, among other things, help companies invest in building more electricity infrastructure, especially environmentally-friendly power generation.

Entwistle said Nigerians have no better friends than the Americans.
His words: “As I told President Jonathan when I arrived in Nigeria in November 2013, and as Secretary Kerry told President Buhari when they met immediately after the presidential inauguration (and, as I am sure President Obama will tell President Buhari directly when he receives him in the Oval Office at the White House on July 20), the people of Nigeria have no better friend than the United States.”

http://nairametrics.com/stolen-funds-will-not-pass-through-our-banks-us-envoy/

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Yanis Varoufakis, Greece’s embattled finance minister, has resigned his post, saying the move could help Prime Minister Alexis Tsipras reach an agreement with creditors.
“I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my … ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement,” Varoufakis wrote in a blog post early Monday.

“For this reason I am leaving the Ministry of Finance today,” he continued. “I shall wear the creditors’ loathing with pride.”

Greece’s Ministry of Finance confirmed his departure in a separate statement.
During his time in government, Varoufakis refused to adopt the mannerisms of a conventional European politician. Instead, he dressed informally and loudly. He frequently appeared in media, launching biting rhetorical attacks against rival negotiators and governments.
The resignation comes just hours after Greece voted on against Europe’s latest bailout offer, raising the prospect that the country could now suffer a worse economic disaster and lose its place in the euro.
More than 60% heeded left-wing Tsipras’ call to vote “no.” He hopes to force Europe to hand over more money with less austerity attached, and cancel some of Greece’s enormous debt.
Thousands of Greeks celebrated in the streets of Athens after the vote on Sunday. But the result sets Greece on an uncertain path that could force it to abandon the euro and print its own currency — with huge damage to the economy.
Varoufakis, in another blog post, said
“the vote was a majestic, big YES to a democratic Europe,It is a NO to the dystopic vision of a Eurozone that functions like an iron cage for its peoples,” he said. .”

Food for thought for Nigerian leaders, would an economic turmoil lead to a personal resignation of any minister in Nigeria recognising the fact that policies introduced has not come out to be a success?
http://nairametrics.com/unlike-in-nigeria-embattled-greek-finance-minister-resigns/

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The Nigerian Electricity Regulatory Commission (NERC) has issued guidelines for consultation by operators that want to review the cost of generation, transmission and supply of electricity, the prices of electricity services and classification of customers.
The guidelines are designed to ensure that such consultations are comprehensive, rigorous open to all relevant stakeholders, meaningful and effective.
“NERC will not accept and consider the application of any distribution company for Revenue Requirement (RA), Rate Design (RD) and Customer Classification (CR) if it has not completed customer consultation in line with these guidelines.”

“These guidelines set out the principles and steps the Distribution Companies should adopt for engaging stakeholders before submitting tariff review applications to the Commission. It aims to assist Discos make the right decisions about when, with whom and how to consult. The Consultation process is expected to achieve real engagement rather than merely following a routine or bureaucratic process,” NERC maintained.

It indicated that the consultation will create accountability in the electricity market as customers will know how the operators are serving them and the various costs of service that justify the rates they are paying
Source: Energy Mix Report
http://nairametrics.com/nerc-issues-consultation-guidelines-for-discos/

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The Seme Command of the Nigeria Customs Service (NCS) yesterday buried 650 cartons of frozen chicken and turkey imports valued at N4 million smuggled into Nigeria from Cotonou, the Republic of Benin.

Shortly after the destruction of the poultry products at the command’s headquarters in Seme, a border town with the Benin Republic, the comptroller in charge of the command, Ndalati Garba Mohammed, said that as part of his command’s efforts to suppress smuggling, his men over the weekend made the seizure of prohibited frozen poultry products from die-hard smugglers who have kept to the illegitimate business.
The comptroller said he had directed increased enforcement at the border area including various footpaths to forestall attempts by desperate smugglers to evade duty and bring in prohibited items through unapproved routes.
He said, “Full compliance with this directive had resulted to various seizures and arrests in the past, including this recent one comprising frozen turkey and chicken which falls under import prohibition.

“While some of the suspected smugglers escaped into the bush at night during the operation, our operatives arrested one of them and also seized a vehicle being used as a means of conveyance of the prohibited items.
“Today, we are destroying these poultry products in compliance with government directives and wish to use this opportunity to warn smugglers to desist from the anti economic vice and face lawful trades.”
According to hime, the command has commenced investigations to arrest those behind this smuggling act and get them to face the full wrath of the law.
“We are also on the lookout for any individual or group of persons that will dare our resolve by attempting to smuggle through Seme Border or any area within our coverage.
“We will never relent in arresting and prosecuting them in line with our enabling law,” he said.

Read more on: http://nairametrics.com/smuggling-customs-destroys-n4m-worth-of-poultry-products/

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American Bank JP Morgan has confirmed it will be ejecting Nigeria from its Government Bond Index (GBI-EM) by the year-end unless the CBN reverses some of the foreign exchange policies it introduced earlier in the year directed at stopping the naira from hemorrhaging value.

JP Morgan in January placed Nigeria on negative watch after the CBN introduced several new policies in the foreign exchange market that some view as capital controls. Apparently, JP Morgan had decided to extend the deadline to eject Nigeria from the index by another six months to accommodate the new government of President Muhammadu Buhari.

The fact that JP Morgan is waiting on President Buhari suggest they believe him and his officials can pile pressure on a supposedly independent CBN to reverse some of its unpopular policies.

What could happen if Nigeria is yanked off?

(1). JP Morgan runs the most popular and used emerging market debt indexes which only included Nigeria in 2012.

(2). If Nigeria is removed, it could lead a lot of foreign investors to sell off their Nigerian bond holdings resulting in frenzy of capital outflows.

(3).If this happens, bond yields will spike and borrowing cost will be high thus negatively impacting an already dire economy.

(4). The new government is also likely to borrow this year to fund its anticipated high budget deficits and as such higher interest rates only just makes things difficult for the new government

(5). The naira may then face another round of major devaluation as the economy will struggle to sustain the pace of forex outflows outside Nigeria

(6). If devaluation occurs again, Nigerian will face more hardship and cost of basic household needs such as food, fuel, transportation, travel, electricity etc. will spike

(7). This will then portent a very risky situation for the new government as an unhappy and restive populace will not do any of its economic and political agenda good
(. Nigerians are already complaining that the government has been too slow on reeling out how it plans to respond to the current economic malaise facing the country.

(9). This could also look bad for the current CBN Governor whose economic policies hasn’t really gone down well with some Nigerians including some in the current APC Government


The new government will be watching what is going on and feelers already suggest some of the members of the presidents economic team may not be happy with the way the current CBN governor is handling the economy.

Read more:
http://nairametrics.com/what-could-happen-if-jp-morgan-ejects-nigeria-from-its-index/