Good News for Naira As Nigeria Secures Support To Help CBN Defend Currency Value in Forex Markets

Good News for Naira As Nigeria Secures Support To Help CBN Defend Currency Value in Forex Markets

  • Nigeria's currency is expected to appreciate as more dollars flow into the country from the crude oil deal with Afreximbank
  • The Nigerian National Petroleum Corporation Limited (NNPCL) reached an agreement with Afreximbank on a crude oil swap deal
  • The CBN is expected to use the funds to intervene in the foreign exchange market, thereby reducing the pressure

Naira is poised to improve in value in the coming days as Nigeria receives an additional disbursement of $925 million under a syndicated $3.3 billion crude oil-backed prepayment facility sponsored by the Nigerian National Petroleum Company (NNPC) Limited.

CBN gets more dollars to defend naira
CBN now has more firepower to defend naira Photo credit: Bloomberg/contributor
Source: Facebook

The latest disbursement brought the total current funded facility size to $3.175 billion after initial funded commitments of $2.25 million in December 2023.

The funds will enable the Central Bank of Nigeria (CBN) to strengthen its interventions in the foreign exchange market.

Read also

Nigeria can kickstart new business climate with potentials of cryptocurrency - Fintech expert

Details of Afreximbank funds

According to Punch, the $925 million, arranged and coordinated by the African Export-Import Bank (Afreximbank), came from a consortium of crude oil off-taker lenders, including Oando Group and Sahara Energy Resource Limited.

Speaking on the latest disbursement, Benedict Oramah, president of Afreximbank, stated that the milestone achieved on the $3.3 billion loan demonstrates the bank's capabilities in performing its role as a crucial development partner for Africa.

His words:

“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."

He added that the facility was a landmark because it was the largest crude oil-backed facility in Nigeria and one of the largest syndicated debts raised in Africa.

Read also

Nigerians react as bank launches ram loans scheme for Sallah celebrations: “Clap for APC govt”

Oramah said the closure of the first accordion demonstrated a positive market appetite for well-structured commodities-backed instruments.

NNPC reacts to the latest disbursement

Reacting, Mele Kyari, the Group Chief Executive Officer of Nigerian National Petroleum Company (NNPC) Limited, commended Afreximbank for its investment philosophy and active interest in co-creating prosperity.

He said

"The successful disbursement of the first tranche under Project Gazelle and its commitment to funding viable and strategic projects clearly indicate investors' confidence in NNPCL and Nigeria's growth ambitions."

Expert projects good news ahead

Economic analysts are optimistic about the naira's prospects following the additional funds.

Kelvin Uveweni, an economist, told Legit.ng that the disbursements from Afreximbank is timely and could strengthen the naira.

He said:

"Now the Central Bank of Nigera will have enough funds to address the dollar shortages in the foreign exchange market and this will play a pivotal role in stabilisng the naira and economy."

Read also

“Dollars are scarce in market”: Naira to appreciate as CBN pumps in over $1.3bn

FG addresses naira the dollar exchange rate

Legit.ng earlier reported that Ben Akabueze, the director-general of the budget office, said the naira's value would strengthen in the foreign exchange market.

Akabueze said this would be possible as the country expects an increase in dollar supply.

He noted that the Tinubu-led government expects the reforms to start yielding results.

Source: Legit.ng

Authors:
Dave Ibemere avatar

Dave Ibemere (Senior Business Editor) Dave Ibemere is a senior business editor at Legit.ng. He is a financial journalist with over a decade of experience in print and online media. He also holds a Master's degree from the University of Lagos. He is a member of the African Academy for Open-Source Investigation (AAOSI), the Nigerian Institute of Public Relations and other media think tank groups. He previously worked with The Guardian, BusinessDay, and headed the business desk at Ripples Nigeria. Email: dave.ibemere@corp.legit.ng.

Online view pixel