The naira is expected to continue its upward trend against the dollar, buoyed by the Central Bank’s recent interest rate increase. However, banks may push back on a new rule that excludes retained earnings from capital requirement calculations.
Naira to continue its upward trend on the back of MPR hike
Naira, Nigeria’s local currency is projected to keep its steady momentum against the greenback as the Central Bank of Nigeria continues its aggressive monetary reforms.
Read also: CBN slashes Customs FX duty rate by 2.9% as naira appreciates
Nigeria’s currency has been one of the best-performing in Africa since the start of March with an increase of 11.04 percent.
Analysts expect the naira to close next week at about N1,250 to N1,300 at the official market while the local currency is expected to further its streak from N1,280 on Thursday to N1,200 at the black market.
The Olayemi Cardoso-led Monetary Policy Committee (MPC) raised the country’s lending rates by 200 basis points Tuesday to 24.75 from 22.75 in February, a move geared to satisfy investors’ confidence and curb inflationary pressures.
Timeline of Cardoso’s policies since installation till date
Here are some of the key CBN circulars issued in the last 6 months and their purposes:
Oct 2023: Appointed new designated banks to collect fees under the Nigerian Export Supervision Scheme (NESS)
Oct 2023: Addressed the surge in rejected cheques due to malfunctioning equipment at banks.
Dec 2023: Made BVN or NIN mandatory for all bank accounts and mobile money wallets.
Dec 2023: Required financial institutions to display their corporate names and CBN licence on all online platforms.
Dec 2023: Introduced new KYC requirements for banks dealing with Non-Profit Organisations (NPOs).
Dec 2023: Issued guidelines for banks dealing with Virtual Asset Service Providers (VASPs) like crypto companies.
Jan 2024: Warned against inaccurate reporting of financial transactions.
Read also: Yield hunters pounce on Nigerian debt in boon for naira
Jan 2024: Revised foreign currency exposure limits for banks.
Jan 2024: Gave International Money Transfer Operators (IMTOs) more flexibility in setting exchange rates.
Feb 2024: Updated Cash Reserve Requirement (CRR) framework.
Feb 2024: Reviewed Consumer Protection Regulations to address new consumer risks.
Feb 2024: Removed the spread on foreign exchange transactions in the interbank market.
Feb 2024: Stopped issuing PTA and BTA in cash dollars.
Feb 2024: Adjusted allowable price deviation limits for imports and exportsFeb 2024: Introduced new requirements for foreign currency cash pooling by International Oil Companies (IOCs).
March 2024: The Revised Guidelines for Blacklisting for Banks and Other Financial Institutions in Nigeria
March 2024: Review of minimum capital requirements for commercial Merchant and Non-Interest in Nigeria
Read also: Naira hits three-month high of 1,300/$ as FX supply surges 69.43%
Retained earnings rule might face push back
Analysts predict that Nigerian banks will lobby for the addition of retained earnings to count towards the increase in minimum capital requirements by the Central Bank of Nigeria (CBN).
The CBN announced a ten-fold jump in minimum capital requirements for banks, nearly two decades since the last exercise.
The new minimum capital requirements for Nigerian banks are N500 billion for those with international authorization, N200 billion for commercial banks with national authorisation, and N50 billion for those with regional authorisation.
The new rules, the first update in nearly two decades, prevent banks from using retained earnings.
“If the lobby fails then we might see more bonus issues in the future (though bonus issues do not qualify for this capital requirement exercise),”
April 1:
Full year 2023 Air transportation data
The National Bureau of Statistics will be releasing its Air Transportation data for the full year 2023 on Monday.
The Air Transportation data for a full year was last published in 2021.
The NBS disclosed in its latest Transport Fare Watch for February 2024 that airfare (single route) rose to N88,000.00 in February 2024 compared to N74,558.11 in the corresponding month last year.
Meanwhile, NBS said that the average fare paid by air passengers on a month-on-month for specified routes single journey was N88,000.00 in February 2024, showing a decrease of 2.20 per cent compared to the previous month (January 2024)
On a state-by-state analysis, Rivers State recorded the highest air transport charges (for specified routes and single journeys) at N100,000.00, followed by Kano State at N96,000.00.
Read also: Naira sustains recovery after CBN’s further rate hike
April 5:
US unemployment rate figures for March
The US unemployment data for March will be released by Friday and it’s projected to hold steady at 3.9 percent.
The data will be released by the Bureau of Labor Statistics.
The Unemployment Rate measures the percentage of the total workforce that is not working, yet actively seeking employment.
A reading that is higher than forecast is generally negative (bearish) for the USD, while a lower than forecast reading is generally supportive (bullish) for the USD.
