Olusegun Odunewu

Confidential EU documents reveal thousands die from Pfizer COVID-19 vaccine

Documents released by BioNTech to the European Medicines Agency (EMA) reveal tens of thousands of serious adverse events and thousands of deaths among people who received...

Business3 years ago

CBN makes social media handle mandatory KYC requirements for bank customers

In an effort to enhance the accuracy and depth of customer identification, the Central Bank of Nigeria (CBN) has made it mandatory for financial institutions to...

Latest3 years ago

‘Freaked Out’ Russia shocked by military coup against Putin

Millions of Russians woke up on Saturday to shocked social media messages and baffling memes depicting a full-on civil war. Tania Krasnova, a single...

Nigeria: Undergoing Economy disruption or reforms?

Business3 years ago

Nigeria’s financial system ‘rotten’ under Emefiele, says Tinubu

President Bola Ahmed Tinubu, on Friday in Paris, France, said the financial system of the country was ‘rotten’ under the suspended Governor of the...

Business3 years ago

Dwindling revenue threatens Nigeria’s capacity to repay debt —DMO

The Debt Management Office (DMO), says Nigeria’s debt is unsustainable, as 73.5% of 2023 revenue will be used to service debt, threatening Nigeria’s capacity to repay...

THE CBN’s ARROW ON CARRY-TRADE. By: Victor Ogiemwonyi Last week, the CBN issued a circular in respect of FX collateral for Naira Loans, to the effect that it has now expressly forbidden the use of FX as collateral for Naira Loans. Banks that already are exposed, have been directed to wind down their positions in 90days. This circular, again confirms that, there is a lot of solid thinking going on at the CBN. Carry-Trade , is what is referred to, when you bring FX to trade in another jurisdiction by taking a loan in the local market and collateralizing it with FX deposit. It purely signifies that the investment is short term and only aimed at making a profit. The CBN has used high interest rates to attract investors to its instruments, but want to make it clear, that they will not allow unrestrained speculation. The policy is Excellent in its timing to be sure, to the extent that It will mitigate the speculative capital that can affect an economy quickly. We have seen the destructive impact of currency speculation evidently in Asian Financial crisis in 1997, when speculators took on the Thailand’s currency, the Bhat and the Malaysia currency, the Ringgit with economic consequences so severe, that it prompted Mr Mahathir Mohammad , the then prime minister of Malaysia to call Billionaire George Soros a moron. He explains …..” we spent years developing our economy, that has helped many rise, to the middle class, and a moron like Soros, comes around and ruins everything" Soros responded by describing Mr. Mohammad as “a hindrance to his country” …Soros and other Currency Speculators, say they are a “force for good “ in a market economy, given that their activities ensure bad economic policies, propping up weak currencies are not allowed to stand. They argue that their speculation makes economies competitive. Regardless of the economic logic for and against speculation, countries like Nigeria should be prepared. They have learnt from the Asian crisis and will ensure Speculators are aware, that Nigeria is watching their activities. The recent notice from the CBN points to this. The 90 days given to Nigerian Banks, to wind -down the loans, is also an appropriate time frame to wind down these loans. Most of the loans are already short term in nature, any way. The Carry-Trade, is also a structured speculative trade. It is one, of the ways to speculate in currencies and other market assets, legally. It starts with pairing two interest rates and taking position in currencies and other market assets. If this practice is not checked early, it can become a contagious problem that can create bubble capital rapidly, from Speculative bets. This is commonly referred to as “ Hot Money”.That is the capital that leaves without notice. We cannot , afford such speculative trading now. Let us settle the money already in the system, while we carry on with other reforms quickly, to increase our attractiveness as a destination for investment. The foregoing not withstanding, we must also point out that speculative Capital is not all bad. It is like taking a short term loan, to tidy up your position. Foreign portfolio investments of this type, provides the immediate liquidity that is needed to fund the FX market, that gets the economy going, while we work to restart properly. We must quicken our reform efforts, to make our economy attractive to attract more Foreign Capital. We already have an attractive large market with our huge population. Further investment in Health and Education, with attention to our energy infrastructure and security , will greatly advantage, our population . We will also need to give our youths the technical skills, to make them more employable. Only strong growth, will ensure full employment. We will need double digit growth in the next decade to ensure this, and make our economy attractive. This is why the current high interest rates, need to come down quickly, once the CBN achieves its objective , of mopping up the excess liquidity in the system, and restoring fair stability for the Naira. The Africa Continental Free Trade Agreement (ACFTA) is a gift to Nigeria, if we know what to do with it. We have a potential to substantially increase our exports and reduce our imports, as we manufacture more of what we need. We must sincerely push our Agriculture to produce more, for our own consumption ,and for exports . We have all the God given comparative advantages, good soil, huge population and a deep market, that provides the incentives. As we become more productive overall, the Naira will get stronger. We have just passed a milestone that many are yet to take notice of: we have allowed the Naira to find its value, even in a down economy. The Naira found support at N1900. That means, in the short run, that is the worse we can expect the Naira to dip. The CBN is also now, preemptively and intelligently signaling price, through the funding of the Bureau De Change market, which is essentially the Black Market. We expect Companies who genuinely need FX, to now be able plan for it. Victor Ogiemwonyi is a retired Investment Banker, and writes from ikoyi, Lagos

Business3 years ago

CBN warns banks over relationship with politically exposed persons

The Central Bank of Nigeria (CBN) has issued a new warning to banks and other financial institutions regarding their business relationships with Politically Exposed Persons (PEPs)....

Education3 years ago

JAMB pegs minimum admission score at 140

The Joint Admissions and Matriculation Board (JAMB) has fixed the minimum scores for candidates to secure admission into universities in Nigeria at 140. The Board also...

Football3 years ago

FIFA announces host for expanded 2025 club World Cup

The first edition of FIFA’s new 32-team Club World Cup will be held in the United States in 2025, world soccer’s governing body said...

Tinubu depart Abuja for an official visit to the Netherlands

Latest3 years ago

Tinubu leaves France, heads for UK

After participating during the just concluded financial summit in Paris, France, Nigeria’s President Bola Ahmed Tinubu has proceeded to London, United Kingdom, for a...

Latest3 years ago

How I escaped dying with passengers of Titan submersible incident–Nwoko

Billionaire Ned Nwoko has described how he escaped dying with the passengers of the Titanic ship, noting that one of close friends and business partner, Hermish...

National Daily Newspaper

Stories By Olusegun Odunewu

Confidential EU documents reveal thousands die from Pfizer COVID-19 vaccine

CBN makes social media handle mandatory KYC requirements for bank customers

‘Freaked Out’ Russia shocked by military coup against Putin

Nigeria’s financial system ‘rotten’ under Emefiele, says Tinubu

Dwindling revenue threatens Nigeria’s capacity to repay debt —DMO

CBN warns banks over relationship with politically exposed persons

JAMB pegs minimum admission score at 140

FIFA announces host for expanded 2025 club World Cup

Tinubu leaves France, heads for UK

How I escaped dying with passengers of Titan submersible incident–Nwoko