…As naira slumps to N402/$
By Omodele Adigun and Chinwendu Obienyi
As managers of the nine banks sanctioned for withholding the Nigeria National Petroleum Corporation (NNPC) $2.1 billion move to negotiate with the Federal Government to resolve the controversy, the Central Bank of Nigeria (CBN), yesterday announced it has readmitted the United Bank for Africa (UBA) into the interbank foreign exchange market.
According to Mrs. Tokunbo Martins, the Director of Banking Supervision, the move followed the remittance of all the outstanding NNPC/NLNG deposits in its possession to NNPC’s TSA account at the CBN.
“Accordingly, the United Bank for Africa (UBA) Plc has been re- admitted into the Foreign Exchange Market effective Thursday, August 25, 2016,” she added.
Meanwhile, some of the affected banks have been explaining efforts being made to iron out the issue with the CBN.
FCMB said it was working with the apex bank to resolve the issue, which it said was a function of illiquidity in the currency markets and the weak economy rather than wilful non-compliance.
First Bank, said it remits government funds when due but was discussing with the CBN and NNPC on ways of retaining the dollars to help solve forex shortages and meet its obligations.
The management of Sterling Bank Plc, said it unequivocally rejects the suggestion that it failed or neglected to disclose at any time, any sum held on behalf of its clients to the regulatory authorities as such balances were fully captured in the relevant regulatory returns. It affirmed that it went beyond this basic requirement of disclosure and reporting to holding several meetings with the parties involved.
“The current situation is a broader sector issue arising from the foreign currency illiquidity in the domestic banking sector. Sterling Bank continues to work with its client and the banking regulator to resolve the situation in the shortest possible time, the bank said.
A statement from Keystone Bank read: “We wish to assure you that Keystone has always made full disclosure of outstanding TSA funds, and had at various times diligently engaged the CBN and relevant stakeholders for resolutions to enable the bank fulfill the TSA obligations in the face of challenging market conditions. All our efforts are geared towards very timely resolution as we understand the importance of sourcing foreign exchange for our customers’ needs to support economic growth.”
The suspension of eight banks from foreign exchange (forex) transactions has taken a huge toll on the weak Naira as it slumped to N402 per dollar Wednesday at the black market
This was N5 weaker than the N397 /$ it traded at its previous session as dollar shortages gripped the official market.
Traders said that the naira, which hit fresh record low since the central bank floated the currency on the official interbank market in June, first touched 400 on the black market this month.
At the interbank market, no trades were posted until three minutes before the end of the session, when CBN which has been reducing its dollar sales, intervened, traders said. Only three deals worth $0.75 million were recorded at 305.50 per dollar, a level the market has closed at since Monday. The naira hit an all-time low of N365.25 per dollar on the interbank on Thursday.
The nine banks suspensions from the interbank market were imposed after they failed to remit $2.1 billion, the government’s share of dividends from National Liquified Natural Gas (NLNG). They were due to pay the funds into the government account at the central bank.
The banks, whose suspension would remain in force until they remit all the funds to the Treasury Single Account (TSA) are First Bank of Nigeria (FBN) $469 million; Diamond Bank Plc ($287 million); Sterling Bank Plc ($269 million); Skye Bank Plc ($221 million); Fidelity Bank ($209 million); Keystone Bank ($139 million); First City Monument Bank (FCMB) $125 million; and Heritage Bank ($85 million).
Foreign investors – other past suppliers of dollars – have remained on the sidelines, making the central bank the main source of hard currency.
On Wednesday, Nigeria’s dollar reserves fell 2.5 per cent from a month ago to $25.67 billion, its lowest level in more than 11 years, according to central bank figures. But reserves may be far less when all future dollar commitments are included.
The CBN settled $1.2 billion worth of outright forward contracts it sold in June at N280.
CBN partners NOA on campaign for clean naira
Miffed by the constant abuse of the naira, the Central Bank of Nigeria (CBN) and the National Orientation Agency (NOA) have joined forces to launch grassroots campaign against naira abuse across the 774 local government areas of the country.
According to a statement by the NOA Deputy Director of Press, Mr. Fidel Agu, Wednesday in Abuja, the move was announced when the NOA Director General, Garba Abari, paid a visit to the CBN Governor, Godwin Emefiele, to deliberate on the proposed mass literacy at the local government level to communicate both monetary and economic policies to the people.
Abari explained that there is need for deeper public sensitisation about respect for the currency, considering the high rate of its abuse by the people, especially during social gatherings and in markets.
He added that the various narratives in the public space concerning misconception on the nation’s economic challenges and government policies for tackling them had necessitated mass enlightenment.
He stated that, “the collaboration will also enable NOA to communicate monetary and other economic policies more effectively to the public in accordance with its mandate. It will help foster massive citizens’ support for government, especially from the grassroots, which is critical to the success of government policies. The naira is like our national flag; we need to do the needful to put it in its rightful position. We can use the local government secretariats and traditional rulers to send the message of attitudinal change toward the naira. “The coming National Ordinance Day on September 16 will be used as another platform to mobilise Nigerians for respect and dignity of our national symbols.”
Emefiele, who was represented by the Director, CBN Governor’s Office, Mr. Olori Oghenekaro, described the collaboration as a welcome development that would serve the apex bank’s interest in controlling inflation and stimulation of economic growth. He explained that the recent monetary policy, which increased lending rate from 12 to 14 per cent was a necessary inflation control measure. He added that, “it is also an incentive to attract foreign direct investment to boost the Nigerian economy.”
Oghenekaro observed that Nigerians were largely misinformed about economic policies hence they needed to be properly sensitised.