Exchange rate falls across Forex markets despite improved dollar supply

The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Wednesday.

September 24, 2020

By Chike Olisah

Forex turnover improved by 135% as Nigeria’s exchange rate at the NAFEX window depreciated after yesterday’s trading day gain to close at N386/$1 during intraday trading on Wednesday, September 23.

Also, the naira depreciated closing at N467/$1 at the parallel market on Wednesday, September 23, 2020, despite another round of forex allocation to BDC operators by CBN.

Parallel Market: At the black market where forex is traded unofficially, the Naira depreciated against the dollar to close at N467/$1 on Wednesday, according to information from Abokifx, a prominent FX tracking website. This represents a N2 drop when compared to the N465/$1 that it exchanged on Tuesday, September 22.

Currency Developments

• The local currency has strengthened by about 7.8% within the last one week at the black market, as the Central Bank of Nigeria introduced some measures targeted at exporters and importers in order to try to boost the supply of dollars in the foreign exchange market and reduce the high demand for forex by traders.
• The CBN has sold over $200 million to BDCs since the resumed forex sales on Monday, September 7, 2020. This was expected to inject more liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.
• However, the exchange rate against the dollar has failed to sustain the initial gains made after the CBN announced plans to provide liquidity.
• BDC operators have urged the apex bank to reconsider the margin allowed for the currency traders as it was inadequate to meet their expenses.
• We also noted that forex traders monitored during the previous week appear to hoard forex as they anticipated further depreciation in the market.
• There has been a drop in speculative buying of foreign exchange, although demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.

NAFEX: The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Wednesday, closing at N386/$1.

• This represents a 20 kobo drop when compared to the N385.80/$1 that it exchanged for on Tuesday, September 22.
• The opening indicative rate was N386.44 to a dollar on Wednesday. This represents a 26 kobo gain when compared to the N386.70 to a dollar that was recorded on Tuesday.
• The N390.84 to a dollar is the highest rate during intraday trading before closing at the rate of N386/$1. It also sold for as low as N383/$1 during intraday trading.

Forex Turnover: Forex turnover at the Investor and Exporters (I&E) window increased by 135.3% on Wednesday, September 23, 2020.

• According to the data tracked by Nairametrics from FMDQ, forex turnover rose from $29.42 million on Tuesday, September 22, 2020, to $69.22 million on Wednesday, September 23, 2020.
• The CBN had in the past few weeks moved to clear the huge backlog of foreign exchange demand, especially by foreign investors wishing to repatriate back their funds.
• The improvement in forex supply after yesterday’s drop reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
• The average daily forex sale for last week was about $34.5 million which represents a drop from the $58.52 million that was recorded the previous week.
• Total forex trading at the NAFEX window in the month of August was about $857 million compared to $937 million in July.
• The CBN in the latest report on Monetary, credit, foreign trade and exchange policy guidelines for fiscal year 2020/2021, lamented that forex market pressure which is as a result of speculative activities in the BDC and I & E segments of the foreign exchange market is expected to exert more pressure on the naira exchange rate.

 

How to register for FG’s N75 billion MSME survival funds

FG released guidelines to access the N75 billion MSME Survival Fund.

By Chike Olisah

The Federal Government (FG) has released the guidelines to access the N75 billion Micro, Small and Medium Enterprises (MSME) Survival Fund and Support Initiatives, which took effect from September 21, 2020.

The scheme, which is the core of the N2.3 trillion stimulus package of the Nigerian Economic Sustainability Plan includes the N60 billion MSMEs Survival Fund and the N15 billion Guaranteed Offtake Schemes.

This disclosure was made in an official statement by the Federal Government through a series of tweet posts on its official Twitter handle.

The statement from FG read, “As the portal for the registration of prospective beneficiaries of Survival Fund opens, interested Nigerians in the Payroll Support Scheme are to note that the site will be open from 10 pm Monday, September 21, 2020.”

The statement says that the registration for the payroll support will start with the educational institutions at 10 pm Monday, September 21, 2020, and will be followed by businesses in the hospitality industry by 12am Friday, September 25, 2020.

The portal will also open for other categories of small businesses from 12am, Monday, September 28, 2020. It should be noted that the scheduling of the registration for prospective beneficiaries is to ensure that the process is seamless and hitch-free. The registration of every sector is to continue until Thursday, October 15, 2020.

To register for this initiative, the Federal Government has also provided a portal for entry. Potential beneficiaries are advised to log on to https://survivalfund.ng to complete their registration.

As part of the registration process, the beneficiaries are expected to provide personal registration details, activate their account, register their organization after they have successfully activated their account.

Corporate Affairs Commission (CAC) Number, Bank Verification Number (BVN), SMEDAN Number, a Tax ID (optional) and the organization’s bank account details will be needed.

Completing the Payroll Support Registration, beneficiaries’ first name, last name, email, mobile number and Password will be required. Also, their Date of Birth, residential address and residential Local Government Area will also be provided.

These 2 MSMEs initiatives namely MSMEs Survival Fund with payroll support track and the Guaranteed Offtake Scheme were introduced by the FG as part of the efforts to support businesses overcome challenges posed by the Covid-19 pandemic.

The MSMEs Survival Fund scheme is a conditional grant to support vulnerable micro and small enterprises in meeting their payroll obligations and safeguard jobs in the MSMEs sector. The scheme is expected to save at least 1.3 million jobs across the country and specifically impact on over 35,000 individuals per state.

The scheme will be implemented over an initial period of 3 months and is targeted at employees of MSMEs and self-employed individuals with 45% for female business participation and 5% for special needs participation

The Guaranteed Off Take Stimulus Scheme is expected to perfect and sustain the income of vulnerable micro and small enterprises from the economic disruptions of the Covid-19 pandemic through the implementation of various initiatives aimed at boosting the production capacities of small businesses as well as the provision of grants.

The duration is also for an initial period of 3 months and is targeted at micro and small businesses registered in Nigeria.