₦airaland Forum

okeysoninv:
That means naira should be exchanging to #1200 officially to dollar

The Managing Director of Financial Derivatives Company Limited (FDC), Bismarck Rewane, said on Tuesday the Naira was over-valued by 200 percent.

Rewane, who stated this in a programme on Arise TV, said ^{the black market where Naira exchanged for N680/$ on Tuesday provided a true picture of the value of the Nigerian currency.}

FSDH Research had in its macroeconomic report stressed that the Naira-dollar exchange rate at the official market did not reflect the current realities in the country.

Rewane, therefore, demanded the devaluation of the Investors and Exporters (I&E) foreign exchange window rate next month to help the Naira find its true value.

In recent weeks, the Naira has depreciated against the dollar across the Nigerian foreign exchange market.

It fell to N431 per dollar, its lowest since the introduction of the I&E forex window.

It weakened to a record low N710 per dollar at the black market last month.

Rewane said: “Most currencies are undervalued but Nigerian naira [is] overvalued by 200 percent.

“The naira will likely depreciate again towards the N695/$-N700/$ range at the parallel market. The CBN will allow for a partial crawling peg in the forex market, and bring the I&E rate down to N440/$ in September.”

According to him, at least 48 countries in the world, including nine in Africa, operate floating or flexible exchange rate regimes.

On Naira’s struggles, the expert insisted that demand pressure and limited foreign currency inflows triggered the depreciation of the country’s currency.

“Forex market in Nigeria is a price discriminatory monopoly. The barriers between the markets are thin and permissible. Multiple exchange rates create room for arbitrage and encourage rent-seeking behaviour,” he added.

The FDC chief also stressed the need for the CBN to increase dollar inflows into the country to address the crisis.

silvoclaira:

NIGERIA’s fiscal crisis worsened last month as the country again failed to meet up with the daily production quota the Organisation for Petroleum Exporting Countries (OPEC) allocated it.

The production figure dropped by 6.2 per cent, from 1.16 million barrels per day (bpd) recorded in June to 1.08 million bpd in July.

The slump came barely a month after OPEC increased Nigeria’s quota to 1.826 million bpd, which economic and financial analysts believe could have helped the country shore up its external reserves and solve foreign exchange problems.

The fall in production level was disclosed by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in its latest crude oil and condensate production data for July 2022.

Condensate is a mixture of light liquid hydrocarbons, similar to light (high API) crude oil — usually separated from natural gas stream at the point of production (field separation) when the temperature and pressure of the gas are dropped to atmospheric conditions.

In January, February, March, April, and May, the country’s crude oil production averaged 1.39 million bpd, 1.25 million bpd, 1.24 million bpd, 1.22 million bpd, and 1.02 million bpd, respectively.

Nigeria has consistently failed to meet the 1.8 million bpd production quota set by OPEC, a situation that has affected the country’s income, and has made the Federal government resort to borrowing from the Central Bank of Nigeria (CBN) to the tune of N19. 9 trillion, according to June records.

Already, the state governors are worried about the effect of this level of borrowings by the government, as informed sources said discussions are underway with President Muhammadu Buhari on the possibility of converting the debt into long-term bond.

The minister of state for petroleum resources, Timipre Sylva, had said in March this year that poor investment and the exit of oil majors were affecting Nigeria’s ability to meet the oil production quota.

Sylva also mentioned security issues as another major factor contributing to the lack of significant growth of the sector, adding that the drive towards renewable energy by climate enthusiasts had discouraged funding for the industry.

Apart from the security concerns, international funders such as the World Bank and the African Development Bank are channeling their fundings to renewable energy targets in a bid to address concerns of climate change.

Industry analysts say Nigeria needs to hasten implementation of the Petroleum Industry Act (PIA) to give room for investments into the renewable energy space as prescribed by the law.

“There is a provision for the renewable energy in the PIA. As such investors would be interested to explore that space on the renewable energy space,” the Partner, Zera Advisory and Consulting and former Chairman of the Nigeria Society of Petroleum Engineers, Joe Nwakwue, told THE ICIR.

https://www.icirnigeria.org/nigerias-fiscal-crisis-worsens-with-slump-in-oil-production-to-1-08million-bdp/