Naira to Appreciate as FG Moves to Boost Forex Liquidity With $7bn NLNG Dividends
- The Nigerian government is planning to convert the $7 billion NLNG dividends to loans to ease pressure on the naira
- The move will reportedly boost foreign exchange liquidity in the system and strengthen the naira
- The Nigerian government is said to be expecting $7 billion from a consortium led by Standard Chartered Bank and a $3 billion NNPC loan
Pascal Oparada has over a decade of experience covering Tech, Energy, Stocks, Investments, and Economy
The Federal Government has decided to convert about $7 billion of Nigeria’s dividends from the Nigerian Liquified Natural Gas (NLNG) to a loan to boost foreign currency liquidity in the Nigerian economy and strengthen the troubled Forex market.
ThisDay quotes a top official in the Nigerian government as disclosing on Thursday, October 26, 2023, that as the Nigerian government expedites action to securitize the NLNG dividends, it is also expecting about $7 billion from a consortium led by Standard Chartered Bank.
Source: Getty Images
Standard Chartered Bank and others to pour $7 billion into the economy
The government also expects the inflow of a $3 billion emergency crude oil swap deal from the Afrexim Bank, which the NNPC secured in August, into the economy, bringing the total expected Forex inflows to $10 billion.
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The Federal Ministry of Finance Incorporate (MOFI) is organizing the inflows, which is an NLNG shareholder.
The move confirms the promise by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, that Nigeria will receive a $10 billion Forex inflow in the coming weeks to stabilize the weak naira.
The move will boost FX liquidity and strengthen the naira
The source reportedly said while the NLNG pays about $6 billion in dividends to the Nigerian government via the NNPC, oil production has declined, and dividends have fallen to about $2 billion.
Market watchers predict that the steps will aid the struggling naira in recovering lost grounds after coming under intense pressure in the last month due to the FX liquidity squeeze.
They believe it would also help to curb the activities of currency speculators who are blamed for the continuous downfall of the naira.
Analysts have said that Nigeria needs about $7 billion to clear FX backlogs and to ease the pressure on the naira.
Mixed fortunes for the naira
Meanwhile, the naira held steady at the parallel market on Thursday, October 26, 2023, trading at N1,300 per dollar against the N1,310 traded the day before.
It, however, depreciated at NAFEM and closed at N837.49 to a dollar, weaker than the N801.10 to a dollar traded the previous day.
Naira makes remarkable recovery in official, black market after FG’s threat to tax parallel market
Legit.ng reported that the naira made a remarkable recovery on Wednesday, October 25, 2023, after days of freefall at both the official NAFEM and parallel markets.
The local currency had tumbled to N1,310 to the dollar in the parallel market, sparking fear among Nigerians that it could hit N2,000 to a dollar before December.
But on Wednesday, October 25, 2023, the fortunes of the Nigerian currency reversed after trading at N1,300 per dollar on the streets from the N1,310 recorded the previous day.
Source: Legit.ng
