The strain is concerning for entrepreneurs who highlight the challenges posed by exchange rate volatility and call for sustainable solutions amid fluctuating policies and economic dynamics.



The Nigerian naira is facing continuous strain on the foreign exchange (FX) market, reaching ₦1,145 per dollar on the parallel market, a slight dip from ₦1,140 on Monday.



Two pivotal policies, implemented since President Bola Tinubu&#8217;s inauguration on May 29, have significantly influenced Nigeria&#8217;s economic landscape. The immediate cessation of the fuel subsidy on the inauguration day and the naira unification on June 14 marked a departure toward a free-floating system by the Central Bank of Nigeria (CBN).



Under this system, deposit money banks (DMBs) and forex market dealers are allowed to engage in unrestricted buying and selling of currency at market-determined rates. This shift signifies a move away from the previous multiple forex regime to a more flexible approach.



The naira experienced a period of depreciation, plummeting to ₦1,310 in October on the parallel market. However, it briefly rebounded to ₦960 in early November. While the naira is demonstrating signs of appreciation at the investors and exporters (I&amp;E) window, the parallel market remains a preferred choice for urgent business transactions due to its ease of accessibility. This preference intensifies the pressure on the naira.



When requesting foreign currency in Nigerian banks, certain regulatory documents are necessary for Form A, including Personal Travel Allowance (PTA), Business Travel Allowance (BTA), school fees, and medical fees. Additionally, Form Q applications for Small and Medium Enterprises (SMEs) may entail a rigorous and time-consuming process which takes days.



At the Autonomous Foreign Exchange Market (NAFEM), the naira was quoted at ₦830.97 on Tuesday, an appreciation from ₦847.55 quoted on Monday, as reported by data from the Financial Markets Dealers Quotations (FMDQ).



The official market witnessed a peak spot rate of ₦1,120 per dollar and a lower rate of ₦701 on Friday. The daily FX market turnover surged by 23.60 percent to $157.78 million on Friday from the $127.65 million recorded on Thursday, reflecting the dynamic nature of the foreign exchange landscape in Nigeria.



Exporters like Oluwaseun Obilana are expressing deep concern over the implications for their businesses.



Obilana, a player in Nigeria&#8217;s export industry, voices his apprehension about the continuous strain on the national currency as exporters rely on stable exchange rates for international trade.



Emphasizing the challenges this poses for exporters, Obilana states to FORBES AFRICA, &#8220;The volatility in the exchange rate is affecting our ability to plan and price our products competitively in the global market. It adds uncertainty to our operations and erodes the profitability of our businesses.&#8221;



He adds: &#8220;A weaker naira not only impacts pricing but also raises the cost of importing raw materials and machinery crucial for manufacturing and production. This, in turn, could have cascading effects on the overall economy.&#8221;



The CBN has been grappling with measures to stabilize the exchange rate, implementing various policies to address the challenges faced in the FX market. However, the recent fluctuations indicate the persistence of underlying issues that continue to pose a threat to the stability of the national currency.



Obilana calls for more sustainable solutions to ensure the stability of the naira.



Nigerian investor Moses Adeolubodun highlights the need for a comprehensive strategy to address the challenges facing the naira.



&#8220;The consistent depreciation of the naira is a cause for concern and demands urgent attention from relevant authorities. A resilient and stable currency is crucial for investor confidence and economic growth,&#8221; Adeolubodun tells FORBES AFRICA.



He also attributes the recent fluctuations to a variety of factors, including global economic uncertainties, fluctuating oil prices, and domestic challenges. Nigeria, being an oil-dependent economy, is particularly susceptible to the volatility of oil markets. &#8220;The recent trend has put additional pressure on policymakers to explore more effective solutions.&#8221;



Adeolubodun emphasizes the importance of collaborative efforts between the government and the private sector to devise sustainable strategies. &#8220;We need a holistic approach that addresses both short-term challenges and establishes a foundation for long-term stability,&#8221; he states.

Naira Value Plunges on Street Amid ‘Stampede’ for Dollars

FX Pressure Persists As Nigerian Naira Hits ₦1,145 Per Dollar On Parallel Market

The Central Bank of Nigeria&#8217;s (CBN) May economic report, recently released, reveals a surge in foreign exchange inflow, reaching $6.03 billion, marking a significant 29.1% increase from the previous month. The data indicates robust economic performance with net inflows of $3.59 billion, showcasing a positive trend in the nation&#8217;s foreign exchange activity.



Despite the overall surge, the CBN experienced a decrease of 27.9% in foreign exchange inflows through the Bank, dropping to $1.70 billion from $2.36 billion in April. This shift resulted in a net outflow of $0.33 billion, contrasting with the net outflow of $0.03 billion in the preceding month.



The CBN report highlights a remarkable 87.2% increase in autonomous inflow, reaching $4.33 billion, demonstrating the resilience of external sources contributing to the country&#8217;s foreign exchange strength. While autonomous outflow also saw an uptick to $0.41 billion, the net inflow rose to $3.92 billion, surpassing the April figure of $2.05 billion. This positive trajectory indicates diverse channels contributing to Nigeria&#8217;s foreign exchange resilience.



Analyzing the intricacies of these fluctuations, economist Kelvin Emmanuel provides insights into the dynamics of Nigeria&#8217;s foreign exchange landscape, pointing out that the CBN report reveals a stark reality of disjointed FX markets in the country.



Emmanuel emphasizes that the autonomous FX flows, measuring inflows into Nigeria from sources outside registered government channels, have failed to bring about convergence in the parallel and Investors&#8217; and Exporters&#8217; (I&amp;E) markets.



&#8220;The real effective exchange rate (REER) does not accurately reflect the willing buyer, willing seller rate, contributing to the existing disparities in the FX markets,&#8221; says Emmanuel.



One key factor highlighted by the economist is the behavior of companies importing USD into Nigeria through autonomous sources. Rather than immediately discharging these funds into the I&amp;E markets, these companies prefer to retain their USD for internal FX operations. Emmanuel attributes this tendency to the substantial black-market premium, currently standing at 32.5%.



The economist stresses that addressing the challenges in the FX markets requires the CBN to take decisive actions. &#8220;Clearing outstanding FX forwards and reducing the incentive to divert funds from parallel markets to official markets is crucial,&#8221; states Emmanuel.



He further emphasizes that as long as companies find it more lucrative to hoard funds due to prevailing market conditions, the issue of disjointed FX markets is likely to persist.



However, financial expert and doctor of business administration, Iheakanwah Felix Arinzeh, expresses optimism to FORBES AFRICA about the findings, attributing the surge to various factors contributing to the nation&#8217;s economic resilience. &#8220;The increase in FX inflow can be attributed to factors such as increased oil production and exports, improved investor sentiment, and effective CBN interventions,&#8221; Arinzeh notes.



Arinzeh sees the surge in the share of autonomous inflows in the total FX influx as a positive indicator, signaling strong demand for Nigerian assets from foreign investors.



He emphasizes the significance of autonomous inflows, stemming from private sources like foreign direct investment and export proceeds. He highlights their resilience to fluctuations in oil prices, a crucial factor given Nigeria&#8217;s heavy reliance on oil as a primary source of foreign exchange earnings.



The surge in FX inflow is anticipated to yield several positive impacts on the Nigerian economy. These include improvements in the country&#8217;s balance of payments, bolstering foreign reserves, providing support for the naira, and enhancing the affordability of imports. However, Arinzeh cautions that the increase in FX inflow remains relatively fragile. He stresses the need for sustained efforts by the Nigerian government and the CBN to implement policies that support economic growth and maintain FX liquidity.

Central Bank of Nigeria Report Reveals Surge In Foreign Exchange Inflow To $10.7 Billion In Two Months

Gold climbed to a seven-month high on Tuesday as markets opted for caution before three major macro events and a blizzard of big tech company earnings in the coming days, starting with Apple later. 



Despite the upcoming action &#8211; a key Brexit vote in the UK , Wednesday’s U.S. Federal Reserve decision and Thursday’s conclusion of the latest Sino-U.S. trade talks &#8211; European and Asian stocks held up relatively well.



London’s FTSE rose 1 percent and Frankfurt and Paris both made some ground. Utilities and other safety plays benefited from a series of U.S. profit alerts, including from digger maker Caterpillar, overnight.



News that the U.S had leveled charges against China’s telecom giant Huawei days before the next round of trade talks between Washington and Beijing knocked sentiment.



But it was offset by promises of more economic stimulus from China, which had berated Washington on Monday for blocking the appointment of judges for its World Trade Organisation appeal against U.S. tariffs.



Amid the turmoil, gold broke through $1,300 an ounce to reach its highest since mid June.



“Investors are very cautious with many uncertainties on U.S.-China trade talks and Brexit. Huawei is at the center of dispute, creating very noisy background for the trade talks,” said Margaret Yang, a market analyst at CMC Markets.



“All these are making it more difficult for investors to judge the market’s direction. Money is fleeing into assets such as gold, seeking safety.” ,”



The U.S.-Sino moves, as well as bets that the U.S. Fed will sound more cautious on Wednesday, kept the dollar near a two-week low and heightened the safe-haven appeal of the Japanese yen and the Swiss franc.



Sterling held at $1.3166 and 86.88 pence to the euro before crucial votes later in the day aimed at breaking a deadlock in the UK parliament over Brexit .



The pound has rallied 6 percent from Jan. 4 lows, but further gains may be limited unless lawmakers emerge with a big majority on the votes.



Most European government bond yields were little changed. Weaker economic data and unknowns like the trade feuds and Brexit have all boosted expectations that interest rates will stay low.



New debt deals from Greece, Belgium and Austria were also in the pipeline. The slide in rates has also encouraged governments to launch new bond deals. Even Angola, which has just taken IMF aid, said it was eyeing a bond sale.



In Asia, shares were mixed, with losses for Australia and New Zealand, with their benchmark indices down 0.5 percent and 1.2 percent respectively. Japanese and Chinese stocks both recovered from early wobbles to finish in the green.



<h4 class="wp-block-heading">WARNING BELLS</h4>



Markets will have more catalysts this week with over 100 of the S&amp;P500 companies reporting results, including Amazon, Apple and Facebook.



Overnight on Wall Street, the Dow and S&amp;P 500 each closed down 0.8 percent and the Nasdaq was off more than 1 percent.



The losses came after Caterpillar and Nvidia Corp joined a growing list of companies cautioning about the crippling effects of softening Chinese demand.



World markets slip on China worries; dollar steady ahead of trade talks



“Both companies are seen as industry bellwethers, and their disappointing results provide further evidence that this time China’s slowdown is for real,” said Rodrigo Catril, Sydney-based strategist at National Australia Bank.



Worryingly, earnings at China’s industrial firms too shrank in December, pointing to more troubles for the country’s vast manufacturing sector, which are already struggling with a decline in orders, job layoffs and factory closures.



Oil recovered after overnight losses. U.S. crude was last up 35 cents at $52.34 a barrel; Brent gained 37 cents to $60.30.



Washington imposed sanctions on Venezuelan state-owned oil company PDVSA on Monday, a step that is likely to curb its crude exports to the U.S. and ratchet up the pressure on President Nicolas Maduro. -Reuters



-Marc Jones

Gold Bar Casting At Valcambi SA Precious Metals Refinery

Gold Reaches Seven-month High as Stocks, Dollar Struggle

There are 163,000 of them, and many of them have been in this magazine. They are prepared to pay $3.5 million for a place to sleep.
That’s the number of dollar millionaires in Africa, according to a report by New World Wealth; a Johannesburg research company.
According to the report, Johannesburg has 46,800 millionaires. About 600 of those have over $30 million. Egypt is next with 20,200 millionaires; Nigeria with 15,400 and Kenya 8,500.
African high net worth individual numbers have increased by 145% in the past 14 years compared to the worldwide growth rate of 73% over the same period. Angola is the top performing African country with growth of just over 480%, according to the study.
With rising numbers of millionaires in Africa, what do they do with their money?
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Property is popular.
While Johannesburg is home to most wealthy South Africans, Cape Town is not far behind. The most expensive spots for prime property in Africa are the V&amp;A Marina, Clifton and Bantry Bay in Cape Town.
According to the Western Cape Managing Director of Pam Golding Properties, Laurie Wener, South Africa’s wealthy buy Cape Town trophy properties on the famous Atlantic Seaboard or in Bishopscourt for no less than $1.4 million.
“The wealthy also invest in smaller apartments in different areas, sometimes off plan, for relatively good rental returns and medium to long-term capital growth. They buy properties off plan speculatively for short-term growth by the time they take transfer and commercial investors generally look for higher returns and often buy in partnerships or syndicates and to hold long term,” she says.
The ambitions of the rich also reach 143 meters above the Sandton skyline. Here in the clouds over the Michelangelo Towers, a penthouse is on sale for $3.5 million. That’s a record.
Rupert Finnemore of Pam Golding Properties, in Hyde Park, says that the previous highest price in Sandton City shopping centre is $3.1 million.
The striking Diamond Walk at Sandton City dazzles with a brilliant new clutch of the world’s most wanted brands such as Prada, Dolce &amp; Gabbana, Giorgio Armani, Burberry, Ermenegildo Zegna, Billionaire Italian Couture, Jimmy Choo, Tod’s and Arque Champagne Crescent.
“Sandton City’s new Diamond Walk adds yet another luxurious dimension to the ultimate shopping variety and experience on the continent,” says Alex Phakathi, Stanlib Fund Manager for the Liberty Property Portfolio.
The Diamond Walk was built on the high demand from the wealthy as the African luxury sector generated an estimated $8 billion in revenue in 2014; with $2.8 billion coming out of South Africa.
Collectables such as art, wine and classic automobiles are increasingly popular and accounted for $5.3 billion of the total assets of African high net worth individuals at the end of 2014, according to New World Wealth.
The company estimates $32 million was generated in South African sales of watches alone in 2014; up from $23 million in 2013.
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“A few years ago, wealthy South Africans had to order these watches through relevant retailers overseas or travel to places such as Bond Street in London to buy them. Now, most of these brands can be purchased over the counter from South African stores,” says wealth analyst Andrew Amoils of New World Wealth.
The rich also spend their time and money relaxing at sea. Amoils says the South African yacht industry generates about $150 million per year.
According to the study, Angola and South Africa are the top spots for yachting in sub-Saharan Africa. Morocco and Egypt are the top spots in North Africa. The yacht owners are mostly male, between the ages of 40 to 50, with average earnings of over $300,000 per year.
Mauritians are the wealthiest in Africa with $21,470 in wealth per person while people in the Democratic Republic of Congo are the poorest with $230 per person, according to Amoils.
“If you look at the asset allocation of the average South African millionaire, about 30% of their assets are in business interests, 25 % in equities, about 20% in property and then rest will be in cash, fixed income instruments, bonds and alternative investments like collectables like art,” says Amoils.
The ambitions of Africa’s elite are high.

Tag: Dollar

FORBES AFRICA SOCIAL MEDIA

FX Pressure Persists As Nigerian Naira Hits ₦1,145 Per Dollar On Parallel Market

Central Bank of Nigeria Report Reveals Surge In Foreign Exchange Inflow To $10.7 Billion In Two Months

Gold Reaches Seven-month High as Stocks, Dollar Struggle

The Rich At Play