Business
CBN order Banks to Stop Naira’s free fall by selling dollars in its vaults
The Central Bank of Nigeria (CBN) has ordered Deposit Money Banks (DMB) to selloff their excess dollar-holdings by Thursday February 1, 2024 to help stablise the local currency, the Naira in the forex.
The directive was conveyed in circular on Wednesday January 30, 2024 by the apex bank.
In the circular, the regulator noted that the DMBs were hoarding in excess of $5 billion which if released into circulation would help stem the continues slide of the Naira.
It also noted that the essence of the DMBs hoarding the US$ was to benefit from the increasing value, being attracted by the local currency’s dwindling fortune.
In the circular titled, “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks”, the CBN raised concerns over the growing trend of banks keeping high volumes of foreign currencies in their tills.
This is coming barely 48 hours after the CBN released a circular, warning banks and FX dealers against reporting false exchange rates, among others.
The new development also came on the heels of the adjustment of the methodology used for the calculation of the nation’s official exchange rate by the FMDQ Exchange.
On this, @Imranmuhdz cited a top banker thus, “Just as some Nigerians prefer to keep their money in dollars because naira is not a good store of value, banks also hold excess dollar liquidity to make gains. They do their own at institutional level.
“What the CBN is saying with this new circular is that, you cannot hold excess dollar liquidity again. Any foreign exchange you are holding must be committed to something, a transaction or obligation you can proof (sic).
“Banks have made a lot of revaluation gains. Some banks, I believe, got approval under the last administration to hold more dollar than the requirement.
“The idea is that if banks sell all these excess dollars, there will liquidity and the exchange rate will stabilise. Foreign investors will come in.”
Nokia has reported a net loss of €68 million for the first quarter of 2025, a sharp decline from the €438 million profit recorded during the same period last year.
The Finnish telecoms equipment maker attributed the downturn to global trade disruptions and recently imposed tariffs by the United States.
The company’s net sales dropped slightly to €4.4 billion, down by one percent year-on-year.
READ ALSO: Trade War: China Strikes Back Wth 125% Tariffs On U.S. Goods
Tariff-related challenges were highlighted by Nokia’s President and CEO, Justin Hotard, who acknowledged the broader economic pressures affecting the industry.
“We are not immune to the rapidly evolving global trade landscape,” Hotard stated. “However, based on early customer feedback, I believe our markets should prove to be relatively resilient.”
He also noted the potential short-term financial impact, saying, “Based on what we see today, we currently expect a EUR 20 to 30 million impact on our comparable operating profit in the second quarter from the current tariffs.”
Earlier this month, U.S. President Donald Trump introduced a 10 percent tariff on global imports, while pausing plans for steeper duties, including a proposed 20 percent levy on products from the European Union.
Despite the quarterly setback, Nokia expressed confidence in its growth prospects.
The company is looking to its Network Infrastructure, Cloud and Network Services, and Mobile Networks divisions to drive sales in the year ahead.
In a sign of continued momentum in the mobile segment, Nokia also announced on Thursday that it had extended its contract with T-Mobile US.
The company said it is continuing “to see positive signs of stabilization” in Mobile Networks.
The pull of market forces which moved the hands of the Nigerian National Petroleum Company Limited (NNPC Ltd) to reduce the price of Premium Motor Spirit (petrol) to N880 per litre in Lagos and N935 in Abuja appears to be a source of torture to independent markets.
Biztellers reports that the latest price review on Easter Monday saw NNPC retail outlets in Lagos drop from N925 to N880, while those in Abuja adjusted from N950 to N935.
The NNPC Ltd’s price reduction came barely a week after the Dangote Refinery lowered its ex-depot price from N865 to N835 per litre.
ALSO READ: BREAKING: Again, Dangote Cuts Petrol Price To N835 per Litre
In addition, the $20bn refinery also directed its partners like MRS, Heyden, and Ardova to sell a litre of petrol at the rate of N890 instead of N920 in Lagos, N900 in the South West, N910 in the South-South, and N920 in the North East.
Consumers can smile because with the reaction, the NNPC Ltd’s new price in Lagos is N10 lower than what the Dangote Refinery is selling at, which might lead to another reaction, as the price war between the two companies.
Though some NNPC Ltd’s retail outlets were observed selling at the old rate in Lagos, it was gathered that they were given the liberty to exhaust old stock before adjusting to the new prices.
Market sources are of the view that the current price war was ignited by the Federal Government’s implementation of the Naira-for-crude policy.
Gold soared to a record high of $3,500 an ounce on Tuesday, as mounting fears over a potential U.S. recession and escalating tensions between President Donald Trump and the Federal Reserve drove investors toward the traditional safe-haven asset.
The precious metal briefly touched an all-time high of $3,500.10 an ounce before retreating slightly to trade at $3,467.87.
READ ALSO: JUST IN: Vatican Discloses Cause Of Pope Francis’ Death
The rally marks the latest in a string of record-breaking gains for gold, fueled by a weakening U.S. dollar, sharp declines across global stock markets, and growing concerns over the health of the world economy.
Market sentiment took another hit this week after President Trump ramped up his trade war with China, slapping fresh tariffs on the world’s second-largest economy and intensifying fears of prolonged economic disruption.
Gold has surged more than 30 percent since the start of the year as investors seek refuge from mounting market volatility.
“The rally reflects ongoing recession fears in the U.S. economy and heightened political tensions, especially as President Donald Trump continues to attack Federal Reserve Chair Jerome Powell,” said Rania Gule, senior market analyst at trading group XS.com.
Concerns about the Fed’s independence were further stoked Monday, when Trump publicly lashed out at Powell on social media, branding him a “major loser” for not cutting interest rates — a move the president has repeatedly demanded.
The sharp criticism follows Trump’s recent suggestion that he might attempt to remove Powell from his post.
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