By Obinna Chima

For the second time since banks started publishing their returns on foreign exchange (forex) utilisation purchased from the Central Bank of Nigeria (CBN), Zenith Bank Plc got the highest allocation garnering a total of $24,547,235.36 million. Zenith Bank was in fourth place in last week’s review of forex returns by THISDAY.

Guaranty Trust Bank Plc, which occupied the number one slot in the last two weeks, did not publish its returns.

Zenith Bank was followed by Stanbic IBTC which got $22,718,300.47 to come in second, while Standard Chartered Bank Nigeria with $20,913,963.04 held the third slot.
Diamond Bank Plc, which published returns of $16,872,037.80, came in fourth place, while Access Bank reported $16,184,742.36 to place fifth.

Also, while FirstBank Nigeria Limited reported returns of $13,086,352 to occupy the sixth place, First City Monument Bank Limited with $9,757,979.93, came in seventh; United Bank for Africa Plc (UBA) with $9,677,854.93, occupied the eight position, while Citibank Nigeria with $8,689,014, was ninth.

Citibank was followed by Fidelity Bank, which, just like the preceding week, remained in 10th place; it was followed by Sterling Bank with returns of $2,690,021.41, Skye Bank Plc – $2,056,427.78, Keystone Bank Limited – $1,725,726.91 and Wema Bank Plc – $1,052,219.39.

Zenith Bank sold forex to a total of 472 customers – individuals and corporate. The bank’s forex sales also showed that a significant number of customers on its list applied to pay school fees abroad and for personal travel allowances.

Just like other weeks, returns by Stanbic IBTC revealed the huge volume of outflow by foreign portfolio investors exiting the country. 57 of its customers out of a total of 153 who bought dollars from Stanbic IBTC exited the markets. These included equities, FGN Bonds, money market instruments and treasury bills.

Also, 51 customers published by Stanbic bought dollars for PTA, while the rest imported industrial raw materials and other visible items.

In all, Standard Bank also sold dollars to 184 customers to import industrial raw materials, school fees, repay loans and repatriate capital.
Like its peers, Diamond Bank sold dollars for invisibles comprising school fees and PTA and also for the importation of essential industrial raw materials. It had 330 customers on its list for last week.

Access Bank had 184 customers on its list, of which 91 bought forex to pay school fees abroad, 50 for PTA, while the rest procured dollars to import industrial raw materials.
Overall, returns published by all the banks showed that demand for forex, especially for education overseas was still high.

Commenting on the trend, the chief executive officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said the recent pronouncement on the funding of school fees from the official market by President Muhammadu Buhari was responsible for the huge demand for forex to pay tuition fees abroad.

“If you look at the list of foreign exchange allocation, it is quite interesting that apart from one or two manufacturers, the bulk is going to school fees.
“This is because people heard somebody say school fees should not be on the list. So even school bills for 2017, people are already applying for them, thus exaggerating the demand by such pronouncements,” he added.

Meanwhile, as members of the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) commence their two-day meeting today, the double-digit inflation recorded in February would top the agenda as the MPC weighs options to stimulate economic activities.
The Consumer Price Index (CPI), which measures inflation, rose sharply to 11.4 per cent in February, compared to 9.6 per cent the previous month, according to the National Bureau of Statistics (NBS). The latest figure saw inflation breach the CBN’s target band of between 6 – 9 per cent.

The last time inflation hit double-digit in the country was in December 2012 at 12 per cent.
But more worrying this time round is the seeming absence of fiscal policies as well as an economic team to chart the direction of the federal government’s policies.
Most analysts have expressed concerns over lack of coordination among the various ministries, departments and agencies, as even the budget, an essential fiscal policy tool, has remained the subject of controversy.

At the end of its January meeting, the MPC had maintained the benchmark Monetary Policy Rate (MPR), the Cash Reserve Requirement (CRR), and the liquidity ratio at 11 per cent, 20 per cent, and 30 per cent respectively.

The MPC also maintained the asymmetric corridor at +200 basis points and -700basis points respectively. Nigeria’s external reserves stood at $27.864 billion as of last Thursday.
However, the most positive developments in the domestic economic environment since the last MPC meeting was the slight rise in oil prices which touched a year high of $41.38 per barrel penultimate Friday, above the 2016 budget benchmark of $38 per barrel.

The premium between the parallel market rate and the official market rate at the forex market, nonetheless, remained wide at an unacceptable margin, as the exchange rate at the official market stood at US$1/N197 as at March 16 and at US$1/N325 at the parallel market, representing a premium of N128.

In the fourth quarter of 2015, the economy grew by 2.11 per cent (year-on-year), compared with 5.94 per cent in the corresponding period of 2014. The issues surrounding the currency curbs introduced by the CBN and weak purchasing power were responsible for the sluggish growth recorded in the fourth quarter of 2015.

In a chat with THISDAY, Rewane, said there might still be some indecision at the meeting.
“I think there will still be some indecision. And the longer you hold back the decision(s), the more difficult things will get. The rational thing to do is to come out with a policy, especially an exchange rate.

“It is very clear that something has to be done, but I don’t think anything would be done.
“There would be an attempt to rationalise the spike in the CPI, but I don’t think they (the MPC members) would do something. If you had made up your mind before that you are not going to do something, you may decide not to do anything.

“But if they take us by surprise and come up with a clear policy, which would allow the currency to adjust in both directions, fine. Now that oil is about $41 per barrel, the naira should be appreciating. So we should have a flexible exchange rate. Without that, we are not going to solve any problem,” Rewane added.

FSDH Merchant Bank Limited, in a report at the weekend, noted that the MPC members were faced with difficult monetary policy choices going by the current economic developments in Nigeria and the short-to-medium term outlook.

“There are arguments in favour of currency adjustment, interest rate hike, and a reduction in interest rate. Notwithstanding the conflicting signals, the MPC needs to act quickly to boost investors’ confidence in the Nigerian economy.

“The fundamentals of the oil market still tend towards lower oil prices in the short-term. Therefore, the revenue of the federal government and the value of the naira still face significant external shocks. While the MPC does not have any control over oil price, an increase in rates and adjustment in the exchange rate may reduce speculative demand for foreign exchange.

“Looking at the conflicting macroeconomic developments in the Nigerian economy, a combination of an adjustment in the exchange rate and an upward movement in yields are required.

“We maintain our exchange rate range of $/N230-$/N240 while we expect the CBN to implement inflation adjusted yields to produce positive yields in the region of 200 basis points,” FSDH Merchant Bank stated.

Culled—–Thisday

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March 13, 2016/Thisday

By Anayo Okolie

In a hard-line decision, a deputy governor of Central Bank of Nigeria and four deputy directors have been suspended by the apex bank Governor, Mr. Godwin Emefiele, for failing to follow financial regulations and due process, leading to the scamming of the bank by fraudsters.

THISDAY gathered last night that the suspended Deputy Governor, Financial System Surveillance, Joseph Nnanna, responded to some spam emails without first cross-checking the authenticity of the mails and following CBN stringent payment process before authorising the release of funds when the governor and several senior officials of the bank were on a flight to China last month.

The names of the affected deputy directors could not be ascertained but they include the deputy director in charge of payment, the deputy director trade and exchange department, and the deputy director in the office of the governor, who heeded Nnanna’s directive to pay when they themselves ought to know CBN’s payment due process.

THISDAY gathered that $441,000 was initially lost to the scammers. $251,000 was however blocked and recovered, leaving a balance of $190,000, which had already been cashed by the fraudsters.

Two of the scammers were however caught in Dubai, United Arab Emirate and are currently being questioned by investigators.
From their modus operandi, the scammers apparently timed the execution of the fraud to take place when the CBN governor and other deputy governors were out of the country.

Emefiele was said to have wielded the big stick by suspending the affected top officials because the CBN has laid-down procedures for the release of funds, none of which was followed in this particular case.
Sources within the bank said following the incident, the governor had warned that henceforth any such infraction would be summarily dealt with.

A statement posted on CBN website only stated that the bank had uncovered and aborted fraud without giving details.
The four-paragraph CBN statement signed by the Ag. Director, Corporate Communications, Isaac Okoroafor, and titled, ‘CBN Uncovers and Aborts Fraud,’ reads: “A highly sophisticated plot to defraud the Central Bank of Nigeria (CBN) by some criminal minded elements has been uncovered and aborted by the bank.

“Although preliminary investigations so far have not revealed any accomplices within the CBN, management has decided to place all key personnel involved in the transaction on suspension. “This is to ensure a full and unfettered investigation.
“This incidence has been reported to relevant authorities. The CBN wishes to assure the general public that the security of the bank remains intact.”

Hackers have been on the prowl lately breaching accounts of banks around the world. Recently, hackers breached Bangladesh Bank’s systems and attempted to steal nearly $1 billion from its account at the Federal Reserve Bank of New York. Though a typo error by the hackers aborted their $1billion heist, they however netted more than $80 million before the cyber heist was uncovered.
The hackers appeared to have stolen Bangladesh Bank’s credentials for the SWIFT messaging system, which banks around the world use for secure financial communication.

They then bombarded the Federal Reserve Bank of New York with about three dozen requests to move money from the Bangladesh Bank’s account there to entities in the Philippines and Sri Lanka.
Four requests to transfer a total of about $81 million to the Philippines went through, but a fifth, for $20 million, to a Sri Lankan non-profit organisation was held up because the hackers misspelled the name of the NGO, Shalika Foundation, prompting a routing bank, Deutsche Bank, to seek clarification from the Bangladesh central bank, which stopped the transaction.

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Despite the pressure faced by the naira at other segments of the forex market in September, the traditional intervention of the Central Bank of Nigeria (CBN) at its regulated Wholesale Dutch Auction System (WDAS) during the month helped to stabilise the naira.

However, from today, the WDAS will no longer exist following its suspension and the re-introduction of the Retail Dutch Auction System (RDAS) by the CBN.

Data compiled by THISDAY showed that the central bank supplied a total of $2.8 billion to dealers at the WDAS in September. This represented an increase by 17 per cent, compared to the $2.4 billion offered by the regulator in August.

However, the CBN sold only $2.626 billion out of the total amount it supplied to the market in September, higher than the $2.165 billion, which was purchased by dealers the previous month.

While the CBN offered $300 million apiece at eight trading sessions held during the month, it raised its dollar supply to $400 million on September 25th, as part of efforts to bolster the naira. The lowest level the naira attained against the dollar at the WDAS was N155.76/$1; while it’s highest value in the month under review was N155.75/$1.

Throwing more light on the RDAS window, the CBN explained that the minimum bid by authorised dealers shall be $100,000.00, saying that just like the WDAS, auction at the retail dutch auction would be held every Monday and Wednesday.

“The importation of foreign currency banknotes by dealers shall henceforth be subject to a prior approval by the CBN. Any authorised dealer intending to import foreign currency cash is required to forward an application, stating the amount and purpose to the Director, Trade and Exchange Department, CBN for consideration,” the central bank added.

Meanwhile, at the interbank arm of the forex market, the naira closed at N161.60/$1, N162/$1 at the Bureau De Change and N163/$1 at the parallel market on the last trading day in September. The Financial Market Dealers Association (FMDA) predicted that in the near term, the nation’s currency would appreciate against the dollar following the withdrawal of public sector deposits in banks.

Also, it is expected that the clamp down on perceived illegal forex sales by some BDCs last month would bring sanity into the system, thus strengthen the naira.

The central bank last weekend withdrew the operating licences of 20 BDC operators and requested the Economic and Financial Crimes Commission (EFCC) to investigate them for money laundering.

Source: Thisday (by Obinna Chima)

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