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Naira drops to 900/$, CBN promises to crack down on BDC operators

On Wednesday, the naira lost value in the black market versus the US dollar, ending the day at 900/dollar.

This happened just two weeks after the local money was being sold on the illegal market for 960 dollars.

The naira’s upward trend in recent days was reversed as the illegal market once more experienced a shortage of dollars.

Earlier this week, the local currency fluctuated between 850 and 880 to the dollar.

The naira decreased on Wednesday to 773.42/$ in the Investor & Exporter window and in the parallel market. On Tuesday, the I&E Window’s local exchange rate had reached 757.10/$.

On Wednesday, bureau de change employees in Lagos, Kano, Abuja, and airports quoted the dollar between 895 and 905 per unit.

Sanusi Ibrahim, a BDC employee at the Lagos airport, told The PUNCH that “We bought and sold the naira today at 890/$ and N900/$.”

At the Central Business District in Abuja, a BDC operator, Yusuf Kareem, said, “The dollar is still scarce. We sold for N900 today.”

At the Allen Avenue Ikeja, Lagos, Alhaji Gambo Aliu, a currency dealer said he told the greenback at 905/dollar.

As naira continued to defy efforts to tame its slide, the Central Bank of Nigeria has threatened to revoke operating the licences of BDCs who violated its rules.

The President, Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, confirmed this after a sensitisation engagement with BDC operators.

“At a sensitisation engagement between the CBN and our compliance officers across the zones, the apex bank reiterated that by 31st of August, 2023, any operator that breaches its circular on the allowable margin of -2.5 per cent and +2.5 per cent on average weighted rate of I&E closing rate, rendition of returns and payment of penalties, risks the revocation of the operating licence,” he said.

The operational framework enabling BDCs to trade foreign currency at rates comparable to those available on the Investor & Exporter forex window was unveiled by the top bank on Friday.

It issued the directive to BDCs in a circular titled “Operational mechanism for Bureau de Change operations in Nigeria” and dated August 17, 2023.

It read in part, “The spread on buying and selling by BDC operators shall be within an allowable limit of -2.5 per cent to +2.5 per cent of the Nigerian exchange market window weighted average rate of the previous day.

“Mandatory rendition by BDC operators of the statutory periodic reports (daily, weekly, monthly, quarterly and yearly), on the financial institution forex rendition system which has been upgraded to meet operators’ requirements.”

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Business

Bureau De Change operators kick as CBN restricts forex trading

The Bureau De Change market segment will now be able to trade foreign currencies at the same prices as those available on the Investor & Exporter FX window, thanks to a new operational mechanism revealed by the Central Bank of Nigeria.

In a circular headed “Operational mechanism for Bureau De Change operations in Nigeria,” dated August 17, 2023, and distributed on Friday, it issued the instruction to all BDCs as well as the general public.

Its implementation should take place right away, the apex bank stated in the circular signed by Dr. O.S. Naji, Director of the Trade & Exchange Department.

This, according to the statement, was done to help the effort to increase the effectiveness of the Nigerian foreign exchange market.

The circular stated, “The spread on buying and selling by BDC operators shall be within an allowable limit of -2.5 per cent to +2.5 per cent of the Nigerian exchange market window weighted average rate of the previous day.

“Mandatory rendition by BDC operators of the statutory periodic reports (daily, weekly, monthly, quarterly and yearly), on the financial institution forex rendition system which has been upgraded to meet operators’ requirements.

“Operators are to note that with effect from the date of this circular, non-rendition of returns would attract sanctions which may include withdrawal of operating licence. Where operators do not have any transaction within the period, they are expected to render nil returns.

“Please, be guided accordingly and ensure compliance.”

However findings by revealed that the order which was to commence immediately was being snubbed by most BDCs who had access to the scarce forex.

Figures from the FMDQ showed that the naira commenced trading on the I&E window at 761.82/$ before closing at 739.52/$ on Friday.

As of Friday’s end, the window’s overall turnover stood at $130.92 million.

The naira was sold at 865/$ on Friday, according to some BDCs who did not want to be named since they were disobeying the new regulation.

According to a BDC who spoke with The PUNCH, “We purchased and sold dollars today for 840 and 865 each. I am unable to sell at the official rate since CBN is not providing us with dollars, and I did not purchase them at a discount.

“How many people have access to that official rate; the dollar is still scarce and expensive.”

Another BDC who would not want to be quoted also said, “The rate we sold today is 865/$. The implication of the new guideline is that if it pays to sell at the black market, I will not sell as a licensed operator.”

Aminu Gwadabe, president of the Association of Bureau De Change Operators of Nigeria, said in a statement that the new instruction was in line with the financial reform for the sector with regard to the licensed BDCs running the guideline.

Gwadabe said, “It is an anchor rate for them, if a customer comes, then you look at what is the closing rate for the I&E window and you buy at the -2.5 per cent to +2.5 per cent; the same thing if a customer comes to you, you use the same I&E window.”

He mentioned that the CBN had discovered through its intelligence report that some BDCs were accessing the independent window and transacting even though they were not using the CBN window.

In the meantime, he claimed, other transactions indicated that BDCs were making purchases and sales using their accounts.

According to him, the CBN also made sure that BDCs received a return on the operations they carried out.

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Business

Nigeria’s inflation increases to 24.08% in July — NBS

The National Bureau of Statistics reported that in July 2023, the headline inflation rate in Nigeria increased to 24.08 percent.

This is the largest reported leap seen in 2023.

Inflation was 22.79% in June, but it has since increased by 1.29 percentage points.

The NBS said, “In July 2023, the headline inflation rate rose to 24.08 per cent relative to June 2023 headline inflation rate which was 22.79 per cent.

“Looking at the movement, the July 2023 headline inflation rate showed an increase of 1.29 per cent points when compared to June 2023 headline inflation rate.

“On a year-on-year basis, the headline inflation rate was 4.44 per cent points higher compared to the rate recorded in July 2022, which was 19.64 per cent. This shows that the headline inflation rate (year-on-year basis) increased in July 2023 when compared to the same month in the preceding year (i.e., July 2022).”

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Business

CBN has lifted ban on Bamboo, Nairabet, AbokiFX, and 437 accounts.

The Central Bank of Nigeria has ordered banks to remove a no-debit restriction placed on the bank accounts of 440 individuals and businesses.

A post-no-debit indicates that all debit transactions on the accounts, including ATMs and cheques, have been prohibited yet the accounts can still receive inflows.

The circular, signed on Tuesday by A.M. Barau on behalf of the CBN director of banking supervision, also directed banks to notify affected consumers of the change.

The apex bank provided no explanation for the action.

Bamboo Systems Technology Limited, Escale Oil & Gas Limited, Rise Vest Technologies Limited, Chaka Technologies Limited, abokiFX Limited, Nairabet International, Northwood Energy Services, and Proport Marine Limited are among the companies on the list.

The circular read, “You are hereby directed to vacate the Post-No-Debit restriction placed on the accounts of the under-listed bank customers at our instance.

“You are also required to inform the concerned customers of the vacation accordingly.”

In 2021, the CBN directed banks to freeze the accounts of 18 enterprises, including bureaux de change, construction firms, investment firms, laundering services, and real estate firms.

Bakori Mega Services, Ashambrakh General Enterprise, Namuduka Ventures Limited, Crosslinks Capital and Investment Limited, IGP Global Synergy Limited, Davedan Mille Investment Limited, and Urban Laundry were among the enterprises affected.

Spray Resources, Al-Ishaq Global Resources Limited, Himark Intertrades, Charblecom Concept Limited, and Wudatage Global Resources were among the others.

Treynor Soft Ventures, Fyrstrym Global Concepts Limited, Samarize Global Nigeria Limited, and Zahraddeen Haruna Shahru were also among the companies represented.

The central bank has unfrozen the bank accounts of all 18 firms.

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Business

Forex Shortage Worsen As Naira Now N876

The naira continued to depreciate against the dollar on Sunday, trading for 876/$ in the black market.

Some Bureau de Change employees who talked with The PUNCH claimed that a week ago, the local currency had swapped to the dollar at a rate of 820.

The Central Bank of Nigeria recently unified the country’s exchange rates, but the naira has since fallen against the dollar as a result of a lack of liquidity, rumors, and other issues.

Alhaji Sanni Abdul, stated, “Naira is currently bought and sold at 850/$ and 876/$. The exchange rate has not been stable for some time now.”

Another BDC operator, Alli Ibrahim, said, “Things are getting more expensive. As of Friday, we were buying and selling the naira at 850/$ and 865/$.”

Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, said the foreign exchange market was evidently under pressure as a result of a number of factors.

He said there was a curious surge in monetary expansion in the last month.

Yusuf said, “Money supply grew by an unprecedented 15 per cent in one month between May and June 2023.  Broad money grew by over N9tn, from N55.7tn to N64.9tn. This surge in monetary growth is unprecedented. Obviously, this must have had an effect on the exchange rate.”

He said that the monetary authorities have to look into this sharp increase in the money supply and take action to prevent further expansion.

“Such dramatic growth in money supply poses a significant risk to macroeconomic stability, especially price stability,” he said.

He claimed that due to the severe illiquidity in the foreign exchange market, there had been an accumulation of unmet foreign exchange demand over the previous few years that was in the billions of dollars range.

According to him, the pressure of the backlog of unfulfilled orders and other maturing currency-related commitments had been unleashed on the investors’ and exporters’ window with a more liberalized forex market.

The naira, on the other hand, strengthened 3.24 percent against the dollar last week at the Investor & Exporter forex window.

According to information from FMDQ Securities’ official trading website, the value of the naira increased marginally by 3.24 basis points to 777.82/$. It was 803.90/$ at the conclusion of the previous week.

The naira had a $77.99m total turnover as of Friday, with an intraday high of 855/$ and a low of 665/$.

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Business

Nigeria’s inflation rate in June was 22.79%.

According to figures from the National Bureau of Statistics released Monday, Nigeria’s headline inflation rate increased for the sixth consecutive month in June 2023, reaching 22.79%.

In June 2023, up from 22.41 percent the previous month, the inflation rate in Africa’s largest economy reached a fresh 17-year high of 22.79 percent.

The NBS report read, “In June 2023, the Headline inflation rate rose to 22.79 per cent relative to May 2023 headline inflation rate, which was 22.41 per cent. Looking at the movement, the June 2023 Headline inflation rate showed an increase of 0.38 percentage points when compared to May 2023 headline inflation rate.

“On a year-on-year basis, the Headline inflation rate was 4.19 percentage points higher compared to the rate recorded in June 2022, which was 18.60 per cent. This shows that the Headline inflation rate (year-on-year basis) increased in June 2023 when compared to the same month in the preceding year (i.e., June 2022).”

Food and non-alcoholic beverages were the main categories that increased inflation by 11.81 percent.

The World Bank had predicted that the elimination of the fuel subsidy would result in a rise in inflation in the nation.

According to the bank’s June 2023 Nigeria Development Update, “The removal of the petrol subsidy is anticipated to cause a temporary increase in inflation in the upcoming months before contributing to disinflation in the medium term.”

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Business

Ecobank requests that FBN deny the acquisition of Otudeko’s shares.

Ecobank has encouraged First Bank Holdings to decline the purchase of 4.7 billion shares by Dr. Oba Otudeko, a former chairman of the bank.

The business magnate owes the bank N13.5bn through his associated firms, according to a letter from the bank’s legal counsel, Kunle Ogunba & Associates, which raised the alarm.

The bank had filed several lawsuits against Honey Group Limited, Siloam Global Services Limited, Anchorage Leisures Limited, Honeywell Flour Mills PIc, and Dr. Oba Otudeko at the Federal High Court in Lagos, according to a letter dated July 7 and signed by the law firm’s principal partner, Oludare Amusan.

The letter said Otudeko personally guaranteed the loan leading to the indebtedness of the prior-mentioned companies.

The letter read in part, “Whereas, the prior-mentioned entities had initially disputed their indebtedness to our client and had consequently filed an action in court to that effect, the Supreme Court on the 27th day of January, 2023 in Appeal No. SC/CV/210/2021 delivered Judgment (Certified true copy of which is herein attached) affirming the indebtedness of the above persons to our client and further commanded that they must pay all the outstanding debts that have accrued under the loan contract between the parties; the same debt personally guaranteed by Dr Oba Otudeko, which said indebted stood in the sum of N13,507,052,417.99.”

The bank claimed through its attorneys that Otudeko, who had personally guaranteed to pay the said debt, had taken actions to divert his assets/funds using a company known as Barbican Capital Limited as a special purpose vehicle, rather than acting quickly to repay their debt in accordance with the supreme court’s directive.

The letter read, “We state that the said Dr Oba Otudeko has via the said Barbican Capital Limited allegedly purchased  4,770, 269, 843, (Four billion, Seven hundred and seventy million, two hundred and sixty-nine thousand, eight hundred and forty-three) shares of FBN Holdings Plc.”

According to the letter, the bank had been informed that the aforementioned shares had been acquired through 19 distinct legal organizations and were currently held by 10 separate businesses.

Based on the aforementioned facts, the law firm argued that it was beyond a reasonable doubt that Otudeko’s actions were intended to divert his assets and the assets of the Honeywell Group of Companies through the aforementioned Barbican Capital Limited, preventing the enforcement of the Supreme Court’s ruling against him and the Honeywell companies, which was intended to recover their undisputable debt to Ecobank.

The letter added that, “We therefore demand that you respectfully stay/reject the approval/consent/registration/ratification {howsoever described or in whatsoever manner of the shares bought by the said Barbican Capital Limited held via the afforested entities, as proceeding with such approval/registration will be tantamount to assisting in the diversion of funds/assets meant for the payment of the debt which has been affirmed by the Supreme Court, same being a flagrant violation of the extant judgment of the Supreme and which has effectively determined the outstanding indebtedness between the Honeywell Group and our client, Ecobank Nigeria Limited,” the letter said.

The letter also required the specifics of the transaction within the following seven days, stating that FBN Holdings was not expected to operate in a way that would encourage the disregard of a supreme court decision as a responsible corporate company.

The lender filed the appeal in response to The PUNCH’s earlier revelation that Oba Otudeko’s Honeywell Group had acquired the majority stake in First Bank of Nigeria Holdings Plc in a cross transaction for N87.8 billion.

The shares which Otudeko bought at N19 per unit were the largest volume of First Bank shares traded in a single day since 2012 when the stock exchange started publishing data.

Given that no single shareholder had ever before formally owned as many shares, the acquisition of the shares sparked accusations regarding the legitimacy of the trades.

Otudeko, who served as First Bank’s chairman from 2014 to 2019, was rumored to be quickly returning to become the bank’s single largest shareholder.

After a tussle with Hassan Odukale, who was also seeking for control of the bank after Otudeko’s departure, billionaire Femi Otedola ended up as the bank’s sole shareholder in 2021.

Some shareholders of the company allegedly met on Monday to discuss the subject in reaction to the billionaire’s attempt to go back to the bank.

The shareholders, who were adamant about keeping Otudeko from taking leadership of the bank, reportedly worried about what would happen if Otudeko were to regain control of the institution in any capacity, particularly after being abruptly removed by the central bank in 2021.

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Business

CBN eliminates the savings and withdrawal limits on domestic accounts

The restrictions on domestic accounts have been abolished by the Central Bank of Nigeria.

The CBN said in a statement on Sunday that the new rule gave account holders unlimited deposit options, unrestricted access to account money, and daily withdrawal limits of up to $10,000.

“CBN issues further guidance on operational changes to the foreign exchange market,” read the statement.

The statement partly read, “Ordinary domiciliary account holders shall have unfettered and unrestricted access to funds in their accounts. Domiciliary account holders are permitted to utilise cash deposits not exceeding $ 10,000 per day or its equivalent via telegraphic transfer.

“DMBs shall provide returns to the CBN, including the ‘purpose’ for such transactions.

“Cash deposits into domiciliary accounts will not be restricted, subject to DMBs conducting proper KYC, due diligence and adhering to the spirit and letter of extant AML/CFT laws and other relevant rules and regulations.”

In order to further increase market confidence, it was also indicated that the CBN would give orderly payment of any committed FX forward transactions priority as they were due.

The CBN would engage stakeholders as it carried out the ongoing reforms, normalize its procedures for maintaining the Cash Reserve Ratio, and guarantee equity in its application across the banking sector.

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BusinessNews & Announcements

CEO of Binance declares Binance Nigeria Limited to be a fraudulent company.

Changpeng Zhao, the CEO of Binance, has branded Nigeris’s affiliate of the international cryptocurrency exchange platform as a hoax.

On Sunday, Zhao announced this via his Twitter account, calling Binance Nigeria Limited “a scam entity.”

“Binance has issued cease & desist notice to the scammer entity “Binance Nigeria Limited”. Don’t believe everything you read in the news,” he wrote.

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Business

Naira devaluation news fake – CBN

The Nigerian Central Bank has refuted the assertion that it has depreciated the naira.

Contrary to claims, the dollar traded at N465 to the dollar, according to a statement from Isah AbdulMumin, Acting Director of Corporate Communications.

The statement read in part, “We wish to state categorically that this news report, which in the imagination of the newspaper is exclusive, is replete with outright falsehood and destabilising innuendos, reflecting potentially wilful ignorance of the said medium as to the working of the Nigerian Foreign Exchange Market.

“For the avoidance of doubt, the exchange rate at the Investors’& Exporters’(I&E) window, which traded this morning (June 1, 2023) at N465/US$1 and has been stable around this rate for a while.”

According to the Daily Trust, the CBN depreciated the naira on Wednesday, dropping it from N461.6 to N630 per $1.

Additionally, on Thursday morning, the CBN’s official account sent out a single tweet that read, “CBN did not devalue the naira.”

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