Stocks losses climb to N1.8trn
Naira depreciates further, CBN reads riot act
By By Babajide Komolafe, Peter Egwuatu & Elizabeth Adegbesan
Oil price has sustained the downward trend amid global economic tension generated by the coronavirus (COVID-19) outbreak, as Nigeria’s premium Bonny Light sold for $36.49 per barrel yesterday, which showed a 0.7 percent decline.
Brent crude sold for $33.24, a 7.12 percent decrease while West Texas Intermediate, WTI, sold for $31.45, a decline of 4.64 percent.
Consequently, key markets in Nigeria are under severe pressures with losses to investors in the Nigeria’s stock market climbing further to N1.8 trillion within the four trading days of this week, while Naira suffered further depreciation to N382/USD1.0, from N375 previous day, following increased panic buying of foreign exchange.
Also the stock market capitalisation dropped 13.3 percent to N11.872 trillion from N13.694 trillion the week’s opening figures on Monday.
The Year-to-Date, YtD, loss worsened to -15.4 percent.
Meanwhile, the equities market major bench mark index, Nigerian Stock Exchange, NSE, All Share Index, ASI, yesterday, fell further by 3.7 percent or 372 bases points, to close at 22,695.88 points, (the lowest in seven years and 10 months) from 13,510.17 points in August 2012.
Investor sentiment as measured by market breadth showed that only two stocks advanced against 44 decliners.
The naira yesterday depreciated further to N382 per dollar in the parallel market even as the Central Bank of Nigeria (CBN) met with bureaux de change operators in a bid to halt the continued depreciation of the nation’s currency.
According to naijabdcs.com, the exchange rate platform of the Association of Bureaux De Change (ABCON), the parallel market exchange rate rose to N382 per dollar yesterday from N367 per dollar on Wednesday. This translated to N15 depreciation, the biggest daily depreciation of the naira in the market since 2017. Consequently, the naira had depreciated by N23.5 in the parallel market in the past two days.
This trend also persisted in the Investors and Exporters (I&E) window yesterday as the indicative exchange rate jumped to N374 per dollar at the close of business from N368.33 per dollar on Wednesday, translating to N5.67 depreciation for the naira, and the biggest daily depreciation since 2017.
In a bid to halt this trend, which is driven by speculation and hoarding, as well as exit of foreign portfolio investors (FPIs) from the nation’s fixed income market, in apprehension over possible devaluation of the naira, the Central Bank of Nigeria (CBN) met with ABCON executives, restating its commitment to sustain dollar sales to bureau de changes (BDCs) across the country.
Confirming this development to Vanguard, ABCON President, Aminu Gwadabe said the apex bank however warned BDCs against dollar sales to unauthorized persons or for ineligible transactions.
He said the apex bank also disclosed it has so far penalized 130 BDCs with N5 million fine each for sharp practices warning that similar sanction will be imposed on any BDC found to be involved in illegal foreign exchange transactions.