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Tag: The Central Bank of Nigeria (CBN)

  • Naira Falls to Record Low Against Dollar, Now Above N1,600 in Official Market

    Naira Falls to Record Low Against Dollar, Now Above N1,600 in Official Market

    By   Milcah   Tanimu

    The Nigerian naira has hit a new low against the United States dollar in the official foreign exchange market, despite recent interventions by the Central Bank of Nigeria (CBN).

    As of Wednesday, August 28, 2024, the naira was trading at a concerning N1,606 per dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM), a significant drop from the previous day’s rate.

    According to data from FMDQ Securities, the naira’s latest exchange rate represents a 0.86% decline, or N28.34, from Tuesday’s closing rate of N1,594.27 per dollar.

    Despite the Central Bank’s efforts to stabilize the naira through various policies and market interventions, the currency’s value continues to deteriorate.

    The ongoing depreciation highlights the complexities of Nigeria’s foreign exchange market, where demand for dollars frequently exceeds supply, especially during periods of heightened economic activity.

    The naira’s decline is not confined to its exchange rate with the dollar. In the spot market, the currency also weakened against the British pound and the euro. The naira fell by N11.87 against the pound sterling, closing at N2,116.69/£1, compared to N2,104.82/£1 the previous day. Similarly, it dropped by N5.46 against the euro, settling at N1,782.62/€1, down from N1,777.16/€1 recorded on Tuesday.

    The naira’s depreciation is attributed to the ongoing challenges faced by the Central Bank in managing high demand for foreign exchange. Seasonal factors, coupled with the activities of importers and multinational corporations seeking dollars for their operations, have placed significant pressure on the naira.

    Despite the CBN’s efforts, the foreign exchange market remains volatile. On Wednesday, the value of FX transactions increased by 5.1%, or $4 million, reaching $160.94 million compared to $156.94 million in the previous session. However, this increase in transaction value was insufficient to prevent further decline in the naira’s value.

    In the parallel market, also known as the black market, the naira held steady against the dollar, trading at N1,615/$1.

    Financial experts have voiced concerns about the naira’s trajectory, calling for more comprehensive measures to address the underlying issues impacting the foreign exchange market. Recommendations include diversifying the economy to reduce import dependency, increasing foreign exchange reserves, and implementing policies to attract foreign investment.

  • CBN Faces Legal Challenges Over Recent Staff Layoffs

    CBN Faces Legal Challenges Over Recent Staff Layoffs

    The Central Bank of Nigeria (CBN) is currently embroiled in numerous court cases initiated by former employees who were dismissed as part of the bank’s recent reorganization efforts under President Bola Tinubu’s administration.

    To date, over 100 lawsuits have been filed by the affected personnel, contesting their terminations and seeking compensation for their entitlements. The CBN had announced the layoff of more than 200 staff on May 24, 2024, in a letter titled “Re-Organisation.”

    Mr. Ola Olanipekun, SAN, who represents some of the dismissed employees, filed these cases with the National Industrial Court in Abuja. He argued that the terminations were unjust and that his clients’ rights to a fair hearing were violated.

    Olanipekun highlighted that the CBN’s actions have resulted in significant financial damages, amounting to hundreds of millions of naira. He is seeking a court order for the bank to pay all outstanding salaries, allowances, and other entitlements to the affected staff.

    Additionally, the claimants are demanding N30 million for litigation costs and prosecution, along with a 21% post-judgment interest per annum on any awarded sums until fully paid.

    The legal documents, filed on August 22, 2024, include a 27-paragraph affidavit affirming the claims of the affected staff.

  • Moghalu Recommends ₦75,000 to ₦100,000 Minimum Wage Amid Labour’s ₦100,000 Proposal

    Moghalu Recommends ₦75,000 to ₦100,000 Minimum Wage Amid Labour’s ₦100,000 Proposal

    Kingsley Moghalu, former deputy governor of the Central Bank of Nigeria (CBN), has endorsed the organized labour’s consideration of a ₦100,000 minimum wage for Nigerian workers. This follows the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) repeatedly proposing ₦615,500 and ₦494,000 respectively, citing inflation and economic hardship.

    On June 3, organized labour declared a strike over the new minimum wage and increased electricity tariffs for Band A customers. However, the strike was suspended after a meeting with the Federal Government to allow for further negotiation.

    In a post on his X handle, Moghalu acknowledged the need for a higher minimum wage but noted that Nigeria’s current productivity levels cannot support the ₦400,000 wage proposed by the NLC. He recommended a more realistic minimum wage range of ₦75,000 to ₦100,000.

    Moghalu emphasized that improving productivity through human capital development and better electricity supply is essential. He stated, “In the debates on the national wage in Nigeria, we miss the fundamental point: there is little or no productivity in the economy. If we had a truly productive economy, there is no reason we can’t have the kind of minimum wage of 400 or 500K that Labour wants. But we can’t, because the level of productivity in the economy cannot support it.”

    He also highlighted that the minimum wage issue extends beyond government salaries to include the private sector and household staff. Moghalu pointed out the need to avoid a minimum wage that could exacerbate inflation and questioned the productivity and skill level of the average Nigerian worker, which impacts the value they create.

  • **CBN Injects Over $300 Million to Stabilize Naira**

    **CBN Injects Over $300 Million to Stabilize Naira**

    By Daniel Edu

    The Central Bank of Nigeria (CBN) has injected over $300 million into Deposit Money Banks (DMBs) in the past two weeks in an effort to stabilize the naira against the dollar. The move is seen as part of the CBN’s strategy to manage the fluctuating exchange rate and ensure liquidity in the foreign exchange market. The injection aims to meet legitimate foreign exchange demands for various purposes, including business transactions, travel, medical needs, and education abroad. The CBN’s intervention comes amid significant volatility in the naira’s value in recent times. The bank has sold dollars to banks at rates reportedly below N1,500 per dollar. The naira appreciated against the dollar at the official market, closing at 1,582/$ on Monday. However, it slipped slightly at the parallel market to between N1,555/dollar and N1,560/dollar. The CBN’s efforts are also part of measures to curb speculative activities that contribute to currency devaluation.

  • **CBN Limits Dollar Purchase from BDCs, Sets New Guidelines**

    **CBN Limits Dollar Purchase from BDCs, Sets New Guidelines**

    By Daniel Edu

    The Central Bank of Nigeria (CBN) has introduced new guidelines for Bureau De Change (BDC) operations, limiting the amount of foreign exchange (FX) that can be sold by BDCs. According to the revised guidelines, BDCs can sell foreign currencies equivalent to $4,000 and $5,000 for personal travel allowance (PTA) or business travel allowance (BTA) to an individual once every six months. The sale must be accompanied by the individual’s bank verification number (BVN) or tax identification number (TIN), a completed e-form, a valid international passport, a valid visa, and a valid international return ticket. Additionally, BDCs may sell up to $5,000 for medical bills once a year and up to $10,000 for school fees once a year. The CBN reserves the right to review the amounts and frequencies for the sale of foreign exchange.

  • Central Bank of Nigeria Denies Redenomination Plans for Naira

    Central Bank of Nigeria Denies Redenomination Plans for Naira

    By Daniel Edu

    The Central Bank of Nigeria (CBN) has officially stated that there are no plans to redenominate or restructure the naira notes in 2024. This announcement was made through a statement signed by the Director of Corporate Communications at the CBN, Isa AbdulMumin, and shared on the bank’s official communication channels.

    The CBN has urged Nigerians to disregard a widely circulated text message suggesting that the bank intends to redenominate the country’s legal tender in the coming year. The CBN emphasized that the contents of the message are misleading.

    The statement from the CBN read, “We are concerned that this narrative, which we had refuted before now, appears to be gaining traction with several debates on the implication of such a policy for the Nigerian economy. We wish to reiterate that the contents of the message are misleading.”

    The CBN further explained that the authors of the message had taken text from a previous policy move by a former CBN Governor in 2007 and modified it to make it seem recent. They made it clear that there is currently no plan by the bank to restructure and redenominate the naira.

    While the CBN may consider reforms, it stressed that any such changes would be carried out following established procedures in accordance with the provisions of the CBN Act, 2007.

    The CBN advised the public to disregard the news report, describing it as speculative and potentially aimed at causing unwarranted panic. It is worth noting that in 2022, the CBN did redesign the N200, N500, and N1000 notes, but this was separate from any redenomination plans.