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Naira appreciates on dollar inflow from oil firms

By on June 4, 2014

The naira appreciated slightly against the United States dollar Monday as a result of dollar sales by local units of four multinational oil companies.
Reuters quoted dealers to have revealed this.

The nation’s currency closed at N162.40 to a dollar, compared to last Friday’s close of N162.80 to a dollar.

Dealers said the local units of Chevron sold $55.6 million, ExxonMobil $50 million, Eni $20 million and Addax sold $10 million to some lenders, increasing dollar liquidity.

The naira has been hovering around N162 to a dollar level for the past two weeks, supported by dollar flows from oil firms buying the local currency to meet domestic obligations and offshore investors buying local debt.

Dealers said the naira might continue to strengthen if additional dollar sales expected from the Nigerian National Petroleum Corporation (NNPC) this week materialise or from foreign investors participating in local debt.

The acting Central Bank of Nigeria (CBN) Governor,
Dr. Sarah Alade, who was  the acting Governor of the Central Bank of Nigeria until today,   had noted that the global economic growth has improved albeit with some downside risks.

According to her, outlook to global growth has turned positive on the recovery from the advanced countries led by United States, United Kingdom and Germany.
Headline inflation had increased to 7.9 per cent in April compared to 7.8 percent recorded in March 2014, suggesting that inflation may be expected to stay elevated in the coming months, as local food supply dwindle at the start of the planting season.

“Aside from the seasonal factors, there is still fiscal risk as a result of pre-election and increased security spending.

“Based on this, monetary policy should remain restrictive to forestall the anticipated impact of fiscal risks and food supply seasonality. Stability has returned to the domestic market,” she had added.

Nigeria’s Excess Crude Account (ECA) had increased to $4.1 billion as at May 16, 2014 from $2.5 billion at the end of 2013, as government intensifies effort at rebuilding the fiscal buffers to forestall the downside risk to the domestic economy through foreign reserve depletion. The projection is that reserves build-up in the coming months would be sustained if prices stay steady on the back of high production and stable prices.

“Proper coordination between the fiscal and monetary authority have helped to stir the economy safely out of the temporary macroeconomic shock it experienced earlier on the year.

“The forecast for 2014 GDP growth ranged from 6.75 per cent to 7.41 per cent but there are risk to this projection.

“While the rebased GDP suggest that the economy is now more diversified and broad-based, sustaining the momentum and creating inclusive growth is the task all policy makers should take seriously,” Alade had added.

 

 

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