Forex: Oil firms to sell to CBN, as bank rations to only critical sectors
• Apex Bank’s COVID-19 Intervention Hits N3.5tr
Having technically devalued the Naira, the bankers’ committee, yesterday, prioritised access to foreign exchange, asking firms to import only what they need and focus on sourcing raw materials and inputs locally.
Specifically, the Central Bank of Nigeria (CBN) asked oil firms to sell their foreign exchange to the bank and no longer the Nigerian National Petroleum Corporation (NNPC), as part of measures to improve forex supply, while identified local pharmaceutical companies will be granted naira and foreign exchange funding facilities to support procurement of raw materials and equipment required to increase local drug production.
Some of the pharmaceutical companies identified include Emzor, Fidson, GSK, May & Baker, Unique Pharma, Swiss Pharma, Neimeth, Sagar, Orange Drugs and Dana Pharma.
With the activation of N1.5tr InfraCo Project for building critical infrastructure, N1tr loans to boost local manufacturing and production across critical sectors, as well as several other initiatives, the apex bank’s intervention to the economy in the wake of the coronavirus outbreak has hit N3.5tr.
On Friday, the bank officially devalued the naira to N380 to a dollar. The devaluation came after over three years of push from financial market managers, the World Bank and International Monetary Fund for the local currency to be devalued.
They had insisted that with a drop in foreign exchange reserves and decline in Nigeria’s dollar earnings over fall in crude oil prices, Nigeria had no option but to devalue its currency.
In a communiqué issued at the end of the bankers’ committee meeting, yesterday, the apex bank stated that its collaboration with other sectors of the economy, is to ensure that profit is not the primary motive at this time, but preserving confidence, financial stability and support for the economy.
The committee noted that trade commitments would be resolved in a comprehensive and orderly way, as well as ensure transparent and open communication with all parties.
Crude oil price on Friday dropped to $29 per barrel, the lowest in nearly three years. Nigeria gets over 95 per cent of its foreign exchange earnings from crude oil sales.
Aside devaluing the naira, the CBN also adopted a unified exchange rate, and pushed the official rate of the naira to N376 to the dollar for International Money Transfer Operators rate to banks; N377 to a dollar for banks’ dollar sale to CBN and pegged CBN’s dollar sales to banks at N378.
In a statement announcing the new rates for the naira, signed by CBN Director, Trade and Exchange Department, O.S Nnaji, the CBN directed bureau de change operators to sell to end-users at not more than N380 to the dollar.
The CBN also pegged the volume of sale for each BDC at $20,000.
The regulator has moved the official rate to N360 to the dollar from N307 per dollar previously, and now selling dollar to foreign portfolio investors (FPI) at N380 at the Investors’ & Exporters Forex window from N366 per dollar previously.
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