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Naira appreciates against US dollars at forex market Friday

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The Naira experienced a modest appreciation against the US dollar and other currencies in the foreign exchange market as the trading day concluded on Friday.

According to data from FMDQ, the Naira strengthened to trade at N1,469.97 per US dollar on Wednesday, up from N1,479.47 on Friday. This indicates a 0.6 percent or N9.5 increase compared to the previous day’s closing rate of 1,433.89 recorded on Tuesday.

However, the Naira’s value of N1,469.97 against the dollar is N50 lower than the rate observed on Monday when the trading week commenced at N1,419.86.

Conversely, in the Parallel Market, the Naira depreciated to N1,490 per Dollar on Friday, down from N1,440 on Thursday.

Meanwhile, during an interaction with the Senate Joint Committee on Banking, Insurance, and Financial Institutions in Abuja on Friday, the Governor of the Central Bank of Nigeria, Olayemi Cardoso, reassured stakeholders of exchange rate stability.

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It is worth noting that the CBN recently introduced reforms, including the ‘Financial Markets Price Transparency and Market Notice of a revision to the FMDQ FX Market Rate Pricing Methodology,’ which led to the Naira’s appreciation to N1,500 per dollar from N891, just over two weeks ago.

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Interest Rate, High Energy Costs Putting Businesses Under Pressure, LCCI Laments

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The Lagos Chamber of Commerce & Industry (LCCI) has expressed concern about the elevated cost of conducting business in Nigeria, citing factors such as the recent hike in the Monetary Policy Rate (MPR) and the increase in electricity tariffs.

Dr. Chinyere Almona, the director-general of LCCI, conveyed these concerns in a statement addressed to LEADERSHIP. Almona highlighted the Chamber’s dismay over the Central Bank of Nigeria’s (CBN) decision to raise the MPR from 22.75 percent to 24.75 percent, stating that “similarly, we view the recent escalation in electricity tariffs as adding to the already unbearable cost of living and doing business in Nigeria.”

She underscored that these decisions are compounded by challenges in importing and clearing goods at Nigerian ports, with fluctuating import duty exchange rates making business planning arduous. Almona emphasized that feedback from businesses and analysts suggests that these actions will significantly burden the private sector, worsening an already challenging economic landscape.

Almona noted that the private sector, crucial for driving growth and employment in Nigeria, is grappling with heightened borrowing costs, reduced investment incentives, policy uncertainties, and pressure in the foreign exchange market. She observed that the recent MPR hikes have translated into higher interest rates, hindering businesses’ access to credit for essential functions like working capital, expansion, and sustainability.

While acknowledging the rationale behind removing the subsidy on electricity supply to attract foreign investors with a cost-reflective tariff, Almona advocated for subsidizing production rather than consumption. She urged for an extensive metering program to cover all electricity consumers and emphasized the necessity of a robust regulatory and policy framework to attract more foreign investments into the power sector.

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Almona pointed out that small and medium-sized enterprises (SMEs) are disproportionately affected by the MPR hike policy, given their thin profit margins and reliance on affordable credit. The surge in borrowing costs stifles their ability to invest in productivity enhancements, hire new employees, and contribute to economic growth.

The Chamber urged the CBN to reconsider its monetary policy stance and refrain from further interest rate hikes. Almona also suggested that the CBN explore alternative policy measures to facilitate credit access, encourage investment, and support entrepreneurship. Additionally, she recommended creating an enabling environment for local meter manufacturing to address the gap in meter deployment.

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Naira appreciates N351 against Dollar at forex in one month

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According to data from FMDQ on the dollar exchange rate spanning from March 8 to April 5, 2024, the Naira has experienced a positive shift, appreciating by N351.12 against the US Dollar within the past month. This indicates an increase from N1,602.17 on March 8 to N1,251.05 per Dollar on Friday. This appreciation amounts to a 21.9 percent increase during the mentioned timeframe, signaling a continued strengthening of the Naira since the previous month.

Muda Yusuf, the Director of the Centre for the Promotion of Private Enterprise, attributed this sustained appreciation of the Naira in the foreign exchange market to recent forex reforms implemented by the Central Bank of Nigeria.

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What you must know about new Electricity Tariff hike in Nigeria

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After the Nigerian Electricity Regulatory Commission (NERC) approved a 250 percent increase in electricity tariffs on Wednesday, DAILY POST provides an overview of what Nigerians need to understand about the hike.

It’s worth noting that NERC approved a rate of N225 per Kilowatt for ‘Band A’ electricity consumers in Nigeria. This marks a significant departure from subsidized electricity in the Nigeria Electricity Supply Industry, amidst ongoing issues with inconsistent power supply nationwide.

Affected Customer Base:

NERC specified that only customers categorized under Band A, who receive a minimum of 20 hours of power supply from the eleven electricity distribution companies, are impacted by the increase. According to Musiliu Oseni, the Vice Chairman of NERC, this affects only 15 percent of Nigeria’s 12.12 million electricity customers. Customers in bands B, C, D, and E, who receive less than 20 hours of power supply, are not subject to the tariff hike.

Implications of the New Tariff:

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This tariff hike translates to a 250 percent increase in the cost of electricity for consumers in Band A, effectively eliminating electricity subsidies for them. Band A customers, who make up 15 percent of urban households in Nigeria, consume 40 percent of the country’s electricity. However, this increase won’t necessarily result in improved electricity supply for the affected customers.

Commencement Date of the Hike:

As per the new tariff order, electricity distribution companies began implementing the new rates on Wednesday, April 3, 2024. This means that Band A customers have started paying 300 percent more for electricity. It’s important to note that since January 2024, customers across all bands have been experiencing inconsistent power supply in Nigeria. The Minister of Power, Adebayo Adelabu, attributed this to constraints in gas supply.

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