₦airaland Forum

“People are afraid to buy because they don’t know what might happen next. The gain is too fast in just three days,” said a Bureau de Change (BDC) operator who prefers to remain anonymous.

The last three days have been remarkable for the exchange rate between the naira and the dollar, which, as of Friday, December 6, 2024, had gained 8.9% in one week.

Starting the week at N1,672, the exchange rate closed at N1,535 on Friday, December 6, 2024.

While the official market experienced rapid gains in the exchange rate, the parallel market, where forex is sold unofficially, presented an even more unsettling scenario for speculators. The naira was gaining faster than they could sell.

By the end of the week, operators informed Nairametrics that the exchange rate was trading at N1,570/$1, a sharp decline from N1,700/$1 earlier in the week, as the naira continued its strong recovery against the dollar.

Why is the naira gaining

Unbeknownst to many Nigerians, the Central Bank of Nigeria recently launched a new trading system called the Enhanced Foreign Exchange Market System (EFEMS).

EFEMS essentially consolidates all previous official foreign exchange windows into one unified system.

This consolidation replaces the fragmented structure of multiple windows, such as the Investors & Exporters (I&E) FX Window, the SME Window, and the Invisible Window. But how does this explain why the naira is gaining against the dollar?

EFEMS Introduces transparency: According to the CBN, EFEMS is expected to simplify operations and improve price discovery, thereby ensuring that trades are more transparent and easier to monitor.

This has largely contributed to the positive outcomes currently being recorded in the official exchange rate.

For example, one person familiar with the operation of the market suggests that the market is experiencing more supply than demand.
With supply outstripping demand, the naira has gained against the dollar.

However, it is unclear where the supply in the market is coming from, as there is no official data to explain this. For instance, the dynamics of pricing might change if the supply is primarily driven by the central bank.

The new system also mandates a minimum trade value of $100,000 for all interbank FX transactions, which seems to have curtailed speculative activities in the market.


Quoting System:

Another plausible reason is the format for placing orders and pricing the exchange rate.

Unlike the previous opaque system, forex dealers informed Nairametrics that the current system is order-based, similar to the way stocks are traded on the NGX.

For example, bids (buying requests) are displayed on the system along with their bid prices, while offers (selling requests) are also shown with their corresponding prices.

This makes it easier to determine how much forex is available in the market and the prevailing prices.

Another stakeholder suggests that EFEMS also implements a two-way quote system, meaning dealers are expected to display both bid and offer prices. This ensures that when trading forex, participants must indicate how much they are willing to buy and sell, regardless of their position in the trade.


EFEMS/Guidelines Still New:

Analysts also opine that the nascent nature of EFEMS creates some uncertainty among traders.

According to one trader, “As a new system, people are obviously wary and do not want to be on the receiving end,” suggesting that the need to comply with market rules is ensuring transparency for now.

The CBN’s new guidelines for forex trading also introduce rigorous reporting requirements. For example, Authorized Dealers must report FX transactions to the CBN within 10 minutes via an API-based system.

BDCs are required to submit daily activity reports through automated portals, while Commercial and Merchant Banks must adopt real-time reporting to enhance monitoring and oversight.


BDC role

The role of Bureau De Change (BDC) operators is critical under the new regulations, fostering further transparency in the functioning of the market.

For instance, under the new guidelines, licensed BDC operators are allowed to buy foreign exchange (FX) from Authorized Dealers to meet customer needs.

This measure aims to balance market accessibility with effective monitoring and control.

The BDC segment, which had previously been excluded from certain FX market activities, is now positioned to play a more active role in meeting retail FX demand.

This inclusion is expected to provide a buffer against the FX pressures faced by individuals and small businesses reliant on BDC services.

If BDCs are sourcing FX from the same market, their pricing is unlikely to diverge significantly from official rates, reducing the wide disparities previously observed.

This marks a significant departure from earlier years when the black market often influenced official rates.

However, this expanded operational scope comes with a caveat: the total monthly transactions for BDCs are subject to an aggregate cap as determined by the CBN.

It is also worth noting that the Association of Bureau De Change Operators of Nigeria (ABCON) informed Nairametrics that the permission for BDCs to purchase foreign exchange directly from Authorized Dealers is not automatic.

Only BDC operators that meet the current capital requirements are permitted to participate in this market.

“We received the news with mixed reactions,” said Gwadabe, a representative of ABCON. “While it is intended to increase liquidity at the retail end of the forex market, it is contingent on meeting the new recapitalization requirements of either ₦500 million or ₦2 billion as stated in the May guidelines.

However, it does not specifically permit all currently licensed BDCs to purchase foreign exchange from the interbank market.”

He added, “It is tied and subject to meeting the new capitalization guidelines introduced by the CBN in May 2024. This also addresses questions about the sources of funds under the new BDC guidelines raised by many applicants. It is not automatic but conditional on meeting these new requirements.”


Panic Selling

Panic selling is widely regarded as a significant factor behind the sharp appreciation in the exchange rate between the naira and the dollar.

Traders who spoke to Nairametrics anonymously suggested that many of their suppliers were in a hurry to sell, as no one wanted to hold on to a currency rapidly losing value against the naira.
One trader disclosed that they even sold at rates as low as N1,500/$1 on the parallel market, despite it being much lower than the rates obtainable on the official market.

These actions have been attributed to panic selling, particularly by speculators who had hoarded dollars for months in anticipation of the naira’s continuous depreciation.

Several economic reports have suggested that the exchange rate of N1,600/$1 is not reflective of the naira’s true value, a sentiment echoed by CBN Governor Yemi Cardoso at the Bankers’ Committee annual dinner.


Speculators worry

If this is indeed what is happening, more losses could await speculators who are uncertain about when the market will bottom out.

Some speculators also point to the December period, which, according to historical data, is often associated with the naira strengthening against the dollar.
This trend is partly attributed to increased dollar inflows from diaspora Nigerians returning for the Christmas holidays.

Finally, it is worth noting that similar boosts in Nigeria’s forex market have been observed before, where the naira suddenly gains strength before depreciating again.

For example, in April this year, the naira appreciated to as high as N1,072/$1 before it started to weaken again. At the time, the central bank had just lifted the suspension of forex sales to BDC operators, injecting liquidity into the system.

PressMyButton:
You see what we've been talking about, why we call people who cannot think as headless mob. You rely ignorantly and stupidly on fake news merchants, unknown faces, sponsored propagandists, enemies of the state to form an opinion over issues that affects your lives meanwhile you ignored statements of facts by professionals and experts in the same industry that have done an on the spot assessment of the refinery. You didn't listen when PENGASSAN, PETROAN, IPMAN, DAPPMA, Association Of ENGINEERS, NUPENG, TUC, all gave credence to PH refinery.

The Nigerian Railway Corporation is to run an end-of-the-year special train service on all its routes across the country.

The train service complies with the Federal Government’s directive through the Federal Ministry of Transportation.

The NRC in a statement by its Deputy Director, Public Relations, Yakub Mahmood, on Wednesday, said the modality for the special service would be released soon.

Recall that The PUNCH exclusively reported on Sunday that the government was planning discounted travel trips during the upcoming Yuletide period, ensuring that citizens across the country can benefit from affordable transportation options as they travel to visit family, friends, and loved ones during the festive season.

The Director of Press and Public Relations at the Transport Ministry, Olujimi Oyetomi, confirmed the plan for the upcoming festivities but didn’t reveal details of the discount percentage to be offered.

Last year the government declared the government approved a 50 per cent discount for inter-state road travel and 100 per cent for train trips for Nigerians travelling to celebrate Christmas with their families.

The discount price, which took effect from December 21, 2023, to January 4, 2024, benefitted no fewer than 112,000 passengers, according to the Association of Luxury Bus Owners of Nigeria.

The statement read, “The management of the Nigerian Railway Corporation, in compliance with the Federal Government’s directive through the Federal Ministry of Transportation, hereby informs the general public that the NRC shall operate end-of-the-year special train services in commemoration of Christmas and New Year celebrations.

“This end-of-the-year special train service on scheduled passenger trains is part of the government’s gesture towards an enjoyable end-of-the-year celebration.

“Dates and modalities of the end-of-the-year Special Train Service shall be communicated in due course. We wish all our esteemed customers a Merry Christmas and a Happy New Year in advance".

Nigerian Ports Authority (NPA) has embarked on operational and investment campaign tour of Onne and Rivers Port complexes to enable them complete profitably.

This was in continuation of its resolve to galvanized the port concessionaires and terminal operators into increasing their in-country investments on infrastructure equipment.

The Managing Director of the authority, Dr Abubakar Dantsoho said on Thursday that his visit to the ports was coming on the heels of the current administration’s readiness to deepen Nigeria’s competitiveness in vessel and cargo traffic to match the needs of Nigeria’s huge population of over 200 million inhabitants.

The tour covered BRAWAL Oil Services Ltd, Onne Multipurpose Terminal, INTELS, INDORAMA,West African Container Terminal (WACT) and NOTORE and the terminals at Rivers Port Complex, Port Harcourt.

Dantsoho explained that with the quantum of investments our maritime neighbours, especially along the West & Central African Coast are attracting, Nigerian ports could only stay competitive if they redouble their investment drive by providing requisite infrastructure and equipment to attract the sizes of vessels that scale up Nigerian cargo throughput that would adequately serve the huge population.

He added: “As far as this management is concerned we have the mandate of the Honourable Minister of Marine & Blue Economy Adegboyega Oyetola to create the enablers for increased investment, and we are poised to do just that.

“Let me seize this moment to reiterate my earlier plea to investors to take maximum advantage of the investor-friendliness of His Excellency President Bola Ahmed Tinubu to infuse greater Investment and be assured of guaranteed return on investment.”

The managing director, who was recently elected as the first ever Nigerian President of the Port Management Association of West & Central Africa (PMAWCA) added that the reality of Nigerian ports processing 2 million containers of cargoes to service a population of over 200 million was an anomaly that must be urgently addressed through deployment of huge investments.

The naira has seen steady appreciation since the Eurobond sales and the introduction of the Electronic Foreign Exchange Matching System (EFEMS) on Monday.

Data from the Central Bank of Nigeria showed that the naira on Wednesday appreciated to N1,608/$1 at the Nigerian Foreign Exchange Market (NFEM). This is from N1625/$1 on Tuesday and N1660 on Monday.

Analysts have projected that this appreciation will likely remain till early next year.

A source who wants to be anonymous said that the gains the naira has witnessed stem from the transparency in the foreign exchange market due to the EFEMS, boosting confidence in the market.

“This transparency has shown that the banks had more liquidity (dollar supply) before the launch of the platforms,” the source said.

On Monday the CBN kick-started the EFEMS, an electronic platform introduced to tackle speculation and improve transparency in Nigeria’s FX market. It automatically matches buy and sell orders, promoting fairness and efficiency in FX trading. Financial experts have expressed optimism about EFEMS’ potential to address persistent challenges affecting the naira and Nigeria’s FX reserves.

The EFEMS system allows authorised dealers, including commercial banks, to place buy and sell orders in real-time. Transactions are automatically matched based on predetermined rules, ensuring swift execution and real-time visibility for market participants and regulators.

Similarly, Gbolohan Ologunro, portfolio manager at FBNQuest said that the country has seen more dollar inflows as Foreign Portfolio Investors (FPIs) have been quite active in the foreign exchange market and that’s because the yield on one-year bills has made it more attractive for them to hold more naira assets.

At the last three primary treasury bills auctions, yields have been at record highs, peaking at 30.71 percent, before dropping to 29.75 percent yesterday.

On Wednesday the one-year NT-bills saw the largest bid this year of about N2.53 trillion.

Uduak Jacob, portfolio manager at Comercio Partner Asset Management also mentioned that FPIs have been flooding the market with dollars.

“FPIs have been flooding the market with dollars, in anticipation of an OMO auction. Some even participated in the NTB auction yesterday,” Uduak said.

Yields at recent OMO auctions are at a record high of 32 percent.

Ologunro mentioned that alongside yields which have attracted foreign investors, the newly introduced EFEMS platform has boosted confidence in the FX market.

“If the platform continues to function efficiently and the yields continue to remain at current levels till next year, FPIs will continue to have faith in the naira and will continue to hold naira assets and this will increase dollar inflows,”.

[b]“These inflows will be sustained by the sales from the Eurobond into the system by January which will likely drive reserves to $45 billion, and continue the naira’s appreciation to February,”[/b]Ologunro said

Nigeria revisited the international bond market on Monday and sold $2.2 billion worth of Eurobonds across two tranches after being oversubscribed to the tune of $9.1 billion.

The Federal Government sold $700 million worth of the 6.5-year Eurobond maturing in 2031 at a coupon rate of 9.625 percent and $1.5 billion of the 10-year tenure at 10.375 percent.

Analysts at CSL stockbrokers said in a recent report that on the positive side, the proceeds from the Eurobond issuance, expected to flow into Nigeria’s foreign exchange reserves by December 9, 2024, are projected to boost the reserves to over $42 billion by year-end.

“This increase could provide the Central Bank of Nigeria (CBN) with greater capacity to support the naira in the near to medium term, potentially leading to a modest appreciation of the domestic currency,” the report stated.

The troops of Operation Safe Haven (OPSH) have successfully rescued 25 kidnapped victims and neutralized three bandits during an offensive operation in Kauru Local Government Area (LGA), Kaduna State.

The operation, code-named Golden Peace, was launched early Tuesday morning to dismantle criminal networks terrorizing the region.

Intelligence sources told Zagazola Makama that the operation began at approximately 6:00 a.m., with troops clearing key bandit strongholds in villages, including Ruwan Sanye, Randa, Rafin Gora, Libere Gari, and Libere Makaranta.

During the offensive, troops encountered resistance at Randa Village, where a gunfight ensued.

Three bandits were neutralized, while several others fled, likely with gunshot wounds.
The criminals were forced to abandon their kidnapped victims, resulting in the rescue of 25 hostages.

Further pursuit of the fleeing bandits led troops to discover traces of their movements, including items such as roasted chicken, cigarettes, tramadol, energy drinks, and clothing.

Troops also uncovered an illegal clinic used by the bandits to treat their injured members.
The makeshift medical facility was subsequently destroyed to deny the criminals access to medical aid.

The Nigerian Air Force (NAF) has reportedly killed several bandits in a series of airstrikes conducted in the Tsafe LGA of Zamfara state.

Zagazola Makama, a counterinsurgency publication focused on the Lake Chad region, reports that the NAF missiles targeted Ado Aliero, a notorious bandit leader, and Dan Umaru, his associate.

Makama added that the strikes, which destroyed the terror leaders’ networks and their regional activities, were conducted by the air component of Operation Fasan Yamma.

The report quoted intelligence sources as saying that “the operation neutralised high-value targets, disrupted regrouping, and killed dozens, with flames raging at Dan Umaru’s home”.

The publication added that security sources identified the sites as terrorists’ planning hubs for attacks.

The north-west region has battled insurgent attacks and insecurity for over a decade, with the Nigerian Army intensifying efforts to crack down on bandits.

In September, troops of Operation Hadarin Daji (OPHD) killed Kachallah Buzu, a notorious bandit kingpin, and several of his fighters in Mayanchi village of Zamfara state.

In the same month, personnel of the Nigerian Air Force (NAF) thwarted a terrorist attack, killing at least 28 bandits in airstrikes on Department of State Services (DSS) facilities in Shiroro LGA of Niger state.

The Federal Government has directed all Ministries, Departments, and Agencies to exclude new projects from their budget submissions for 2025 unless these can be linked to the completion of ongoing initiatives. This is according to the 2024 Federal Government Budget Call Circular document obtained by The PUNCH.

The 2024 Budget Call Circular clearly states that no new projects will be admitted into the 2025 capital budget unless MDAs can demonstrate that sufficient resources have been allocated for the completion of ongoing projects.

The document read, “Again, the thrust of the FGN’s capital expenditure programme in 2025 will be the completion of as many cardinal ongoing projects as possible, rather than starting new projects. Thus, MDAs are hereby advised that new projects will not be admitted into the capital budget for 2025 unless adequate provision has been made for the completion/work programme of all ongoing projects.”

MDAs are required to review their existing project portfolios and submit updated lists of both ongoing and new capital projects using the Budget Office’s Capital Project Status Template.

Also, MDAs have been instructed to carefully scrutinise and justify their proposed projects and programmes,ensuring that these align with the country’s immediate needs and the government’s key development priorities. These priorities, as set out in the circular, include national security, economy, education, health, agriculture, infrastructure, power and energy, as well as social safety nets, with a focus on women and youth empowerment. In addition, all projects must be aligned with the objectives of the National Development Plan 2021–2025.

This includes building a strong, diversified economy, investing in critical infrastructure, strengthening security and governance, and fostering a vibrant, healthy, and educated population. The Federal Government’s 2025 expenditure has been projected at N47.90tn, an increase of 36.6 per cent from the 2024 budget.

The budget also includes provisions for the newly established South-East, South- West, and North-West Development Commissions. Debt servicing remains a significant portion of the expenditure, with N15.81tn set aside for this purpose, including N430.27bn for maturing bonds. Personnel and pension costs are estimated at N9.64tn, reflecting a 58.7 per cent increase from 2024, largely due to the implementation of the new minimum wage. A total of N16.48tn has been earmarked for capital expenditure in 2025, accounting for 34.4 per cent of the overall budget.

This allocation marks an 11.2 per cent increase from the 2024 capital budget and is intended to focus primarily on completing ongoing projects rather than initiating new ones. MDAs have been urged to prioritise projects that are nearing completion, particularly those in line with the government’s current priorities.

The document noted, “In allocating capital budget resources, MDAs are enjoined to accord priority to ongoing projects, especially those nearing completion that fit into government’s current priorities. As a general rule, MDAs will not be allowed to initiate new projects/programmes unless they can demonstrate that adequate provisions have been made for ongoing projects.

“In addition to alignment with the objectives of the NDP, the likelihood of completion within the medium-term, i.e, not later than 2025, should be considered in prioritising capital projects.”

Also, for projects valued over N150m, MDAs must provide GPS coordinates to aid geotagging, enabling the use of technology for monitoring and evaluation.

helinues:
Sensational news.

Is president Tinubu even around. Something that already scaled through second readings .. If some elites noise have been inconsequential about the tax reform bill........

Punch will soon receive some heavy punches from FG

TonyeBarcanista:
Who was the president that removed subsidy on petrol and floating of Naira?

Secondly, have you read the bill?

helinues:
Just go through the ops threads history then you can understand the motives

NLCreator666:
Some of these Lagos intellectuals are fraud..it feels like 2012 all over again when GEJ wanted to remove subsidy and your Lagos intellectuals and overlords resisted it.

NLCreator666:
Reactions

The Federal Government has commenced a free Compressed Natural Gas bus service in Abuja to ease transportation costs for Nigerians in the capital city.

The CNG buses began operations on December 2, 2024, as shown in a video shared by the Presidential CNG Initiative on its social media page.

The buses, according to reports, will run along popular routes from suburbs in Abuja such as Mararaba to Eagle Square and Berger bus stop.
The government had said that the buses would convey passengers free of charge for the next 40 days. The free bus ride will end on January 6, 2025.

Last week, the government, through the Ministry of Transportation, handed over 15 Compressed Natural Gas-powered buses to three transport unions to ease the high cost of transportation in the capital city.

The transport unions that benefitted from the gesture include the National Road Transport Workers Union, the Nigerian Association of Road Transport Owners, and the Road Transport Employers Association of Nigeria.

In a video obtained by our correspondent on Monday, commuters who benefitted from the program commended the government initiative to reduce the costs of transportation.

One of the respondents, Fatima, said, “I just boarded a CNG bus going to Maraba, and we were asked not to pay, and I didn’t pay. I hope it will continue for long.

“I like it very much; I know this is the beginning of good things that will happen to Nigerian people.”

Another respondent, Blessing, said, “If they’re doing like this, we’ll be happy. After this one now, let them bring down the price. That’s why I said after this one they should.”

LegendHero:
Tinubu should give us state police.

That will be very beneficial especially to the Middle belt. It will also benefit SW, SS, SE, and even the core North.

National policing system don fail us. Each state having their police will be better and their orientation and philosophy will be totally different compared to the current one.

Last thing wey go happen, they won't re-elect him. But he will go down as the president that campaigned on restructuring and actually fulfilled most of the item and stayed true to the cause.

The Nigeria Union of Petroleum and Natural Gas Workers, NUPENG, has expressed excitement over the resumption of refining of petroleum products by Port Harcourt Refinery, saying “we are reminded of the essential role this progress plays in addressing Nigeria’s energy challenges, alleviating hardship for workers and citizens, and fostering economic stability.

Reacting to the news that the Port Harcourt Refinery has finally come on stream, NUPENG in a statement by its President and General Secretary, Prince Williams Akporeha and Afolabi Olawale, respectively, among others, said “On behalf of the National Executive Council, NEC, and the entire membership of the NUPENG, we extend our warmest congratulations to the Group CEO, Mr. Mele Kyari and the entire management of the Nigerian National Petroleum Company Limited (NNPCL) on this monumental achievement of successfully re-streaming the Port Harcourt Refinery after several years.

“The commencement of crude oil processing and the dispatch of petroleum products from the refinery is a landmark achievement that resonates deeply with the aspirations of Nigerian workers and citizens. This milestone demonstrates NNPCL’s unwavering commitment to achieving energy independence and fostering sustainable economic growth for our dear nation.

“Your exemplary commitment and resilience in steering the Port-Harcourt Refinery Company, PHRC, rehabilitation project to completion, despite numerous challenges, reflect the highest standards of dedication and determination.

“We are very pleased with the achievement of over 16 million man-hours without a single Loss Time Injury (LTI), which is a testament to meticulous planning, professionalism, and the hard work of all involved; an accomplishment that brings pride to our Union members.

“We commend the indispensable support of His Excellency, President Bola Ahmed Tinubu, as well as the collaborative efforts of the NNPCL Board of Directors, Staff, and Contractors. This accomplishment is a clear demonstration of what can be achieved through collective effort and shared commitment to national progress.

“As the refinery resumes production and begins loading critical products such as Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), and Household Kerosene (HHK), we are reminded of the essential role this progress plays in addressing Nigeria’s energy challenges, alleviating hardship for workers and citizens, and fostering economic stability.

“While the successful re-streaming of the Port Harcourt Refinery stands as a beacon of hope, it also reinforces our collective optimism for the rehabilitation of the Warri and Kaduna refineries. We earnestly hope and pray that these projects will also come to fruition soon, providing the much-needed stimulus to our nation’s economy and further easing the energy burden faced by Nigerians. We remain confident that NNPCL will deliver on these expectations under your visionary leadership.

“Once, more congratulations to you and your team on this transformative achievement. The NUPENG remains a steadfast partner in the collective journey toward achieving a vibrant, inclusive, and sustainable oil and gas sector that uplifts every Nigerian worker and citizen.”

The Executive Director of Patriots for Advancement of Peace and Social Development, Dr Sani Abdullahi Shinkafi has lambasted the northern governors resisting the proposed tax reform bills.

In an interview with Arise TV on Monday, Shinkafi described the governors as “lazy” and unwilling to develop strategies to generate internal revenue.
According to him, the governors who are claiming that the tax bills will increase hardship in the northern part of the country “are responsible for the failure of the economy, chronic insecurity, unemployment, poverty, and educational backwardness in the northern region.”

Shinkafi strongly defended the contentious tax reform bills amidst criticisms, particularly from northern governors, describing the opposition as politically motivated and based on misinformation.

Shinkafi also said “the attack by the Northern Youth Assembly is uncalled for,” stressing that the Deputy Senate President, who presided over the proceedings, was fulfilling his constitutional duties.