Naira Sells For New Rate as Nigeria Secures New $925 Million Oil-Backed Loan From Afreximbank

• Friday saw a flat change in the value of the naira for the week as new oil facilities valued at $925 million bolstered foreign reserves.
• The local currency gained by 0.13% as the dollar was quoted at N1,483.99 compared to N1,485.99 the previous day
• Similar to this, the external reserves also gained by 0.31% to close the week at $32.794 billion from $32.694 billion

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

The naira finished the week flat on Friday, June 9, at the official foreign currency (FX) market as new oil facilities worth $925 million strengthened external reserves and increased inflows of dollars.

Data from the FMDQ Securities Exchange Limited shows that the value of the naira increased by 0.13% as the dollar was quoted at N1,483.99 on Friday, stronger than N1,485.99 quoted at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Friday, May 31, 2024.

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The naira finished at N1,483.99 per dollar on Friday, a day-over-day decline from Thursday's closing price of $1,481.49 at the NAFEM.

From $213.31 million on Thursday to $269.27 million on Friday, the dollar given by ready sellers and willing purchasers climbed by 26.23%. Over the course of the week, $1.05 billion in dollars were sold.

Foreign reserve improves

According to figures from the Central Bank of Nigeria's foreign reserves, which provide the CBN the capacity to defend the naira, ended the week at $32.794 billion on Friday, up 0.31% from $32.694 billion recorded on Friday of last week.

On the black market, or parallel market, the local currency lost one percent of its value. Friday's closing value of the naira per dollar was N1,495, down from N1,480 on Friday of the previous week. On a daily trading basis, the naira closed steady at N1,495 per dollar.

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On Thursday, the Nigerian National Petroleum Company (NNPC) Limited-sponsored syndicated US$3.3 billion crude oil-backed prepayment facility saw the additional transfer of US$925 million from African Export-Import Bank (Afreximbank). This raises the facility's overall funded size to US$ 3.175 billion.

Through the accordion arrangement, which was organised and managed by Afreximbank, BusinessDay reported that a group of crude oil off-taker lenders, including but not limited to the Oando Group and Sahara Energy Resource Limited, raised a total of US$925 million.

Commenting on the disbursement, Benedict Oramah, president and chairman of the board of directors of Afreximbank, said,

“The milestone achieved thus far, on this facility, demonstrates the Bank’s capabilities in performing its role as a crucial development partner for Africa. It reaffirms our commitment to assisting our member states in their efforts to achieve economic growth and stability. This funding will greatly support the attainment of Nigeria’s short and long-term economic development priorities.”

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Oramah described the original facility as ‘a landmark’ for being the largest crude oil-backed facility in Nigeria and one of the largest syndicated debts raised in Africa, adding that the closure of the first accordion demonstrated the existence of positive market appetite for well-structured commodities-backed instruments.

Samuel Oyekanmi, research and insight associate with Norrenberger Financial Group told Legit.ng,

"what is great is to ensure improved liquidity in the official market, bridging the arbitrage caused by the disparity between the official and the parallel market, and nip the impact of FX shocks on prices in the bud."

CBN Tells Oil Companies to Sell Dollar

Legit.ng reported that the CBN has said that International Oil Companies (IOCs) are allowed to sell their 50% remaining repatriated export revenues on the Nigeria foreign exchange market.

This was disclosed by CBN on Friday in a circular signed by W.J. Kanya, director of the trade and exchange department.

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On February 14, the CBN restricted IOCs' ability to transfer profits from oil exports to offshore parent company accounts.

Source: Legit.ng