THIS WEEK: Nigeria’s Capital Inflows Fall, Foreign Trade Rises in Q1 2022


This week has proven to be quite active in the macro space. Nigeria’s external reserve continued its downward trend, capital inflows fell to $1.57 billion in the first quarter of 2022

However, Nigeria’s foreign trade rose to 13 trillion naira in the first quarter of 2022, up 11.1% from 11.7 trillion naira recorded in the previous quarter and up 65.4% from 7,860 billion naira recorded in the first quarter of 2021.

Here is a compilation of notable events this week in Nigeria’s macro-economic space, markets, regulators as well as other global economies.

MACROECONOMICS

Exchange rate

  • The official market exchange rate recorded a marginal depreciation during the week, falling 0.06% to close at N419.75/$1 on Friday from N419.5/$1 recorded the previous week. A total of $1.34 billion was traded in the Investors and Exporters window, which is significantly higher than the $535.94 million traded the previous week.
  • Similarly, on the black market, the naira closed at N606/$1 on Friday, June 3, 2022 compared to N610/$1 recorded the previous week. This represents an appreciation of 0.7% compared to the previous week.
  • Additionally, the exchange rate in the peer-to-peer market closed at N604.48/$1, representing an appreciation of 0.7% from the N608.99/$1 recorded the previous week. .

External reserve

  • Nigeria’s external reserve continued its downward trend losing $94.69 million during the week, down 0.02% from $38.57 billion to $38.48 billion to Thursday, June 3, 2022.
  • The level of Nigerian reserves continues to plunge given the continued intervention of the apex bank in the official I&E window. Levels remained low despite rising crude oil prices as Nigeria’s production capacity fell short of OPEC’s quota.

Capital inflows from Nigeria fell to $1.57 billion in the first quarter of 2022

  • The National Bureau of Statistics (NBS) released the Capital Imports Report for the first quarter of 2022, which showed that Nigeria attracted a total of $1.57 billion in capital inflows in the first quarter of 2022, down 28.1% from $2.19 billion in the prior quarter. .
  • Compared to the corresponding period of 2021, Nigeria’s capital imports decreased by 17.46% from the $1.91 billion received in the first quarter of 2021.
  • The largest amount of imported capital by type was received through portfolio investment, which accounted for 60.87% ($957.58 million). Next come other investments with 29.28% ($460.59 million) and foreign direct investment (FDI) representing 9.85% ($154.97 million) of the total capital imported in the first quarter of 2022.

Nigeria’s foreign trade hit N13 trillion in Q1 2022

  • Nigeria’s foreign trade rose to 13 trillion naira in the first quarter of 2022, up 11.1% from 11.7 trillion naira recorded in the previous quarter and up 65.4% from 7.86 trillion naira. nairas recorded in the first quarter of 2021.
  • According to the BES report, the improvement in Nigeria’s merchandise trade was due to the increase in crude oil export earnings during the quarter under review. Specifically, Nigeria’s crude oil revenues increased by 31.66% quarter-on-quarter to reach N5.62 trillion in the first quarter of 2022.
  • Consequently, total export earnings improved by 23.13% from 5.77 trillion naira recorded in Q4 2021 to 7.1 trillion naira in Q1 2022 against a decline of 0.67% in the import bill at N5.9 trillion in the same quarter. This resulted in a positive trade balance of N1.19 trillion, the first since the second quarter of 2021.

REGULATORS

CBN issues final guidelines on neutral bank treasury centers

  • The Central Bank of Nigeria (CBN) has released the final draft guidelines for the establishment of Bank Neutral Cash Hubs (BNCH). This is according to a circular recently issued by the Central Bank of Nigeria.
  • Nairametrics reported when the CBN released an EXPOSURE DRAFT for comment and comment, after which the apex bank released the final draft.
  • Bank Neutral Cash Hubs (BNCH) seeks to reduce costs and improve operational efficiency in the cash management value chain in Nigeria.

CBN has raised the online transfer limit to 25 million naira and 250 million naira for individuals and businesses respectively

  • CBN is increasing the limit for “highly secure online funds transfer” from 100 million to 250 million naira for businesses and from 10 to 25 million for individuals.
  • This is in accordance with a circular recently issued by the Central Bank of Nigeria, signed by Musa I. Jimoh, Director of the Payments System Management Department.
  • This reversion would take effect on operations of the NIBSS instant payment system and other electronic payment options with similar functionality in Nigeria.

Nigerian banks’ non-performing loan ratio jumps to 5.3% in April 2022

  • The Non-Performing Loan (NPL) ratio of commercial banks in Nigeria increased to 5.3% in April 2022 from 4.84% in February 2022. This is according to data from the Central Bank of Nigeria.
  • The NPL ratio calculates the percentage of bank loans that are not managed effectively or have gone completely bad. As a result, Apex Bank has started to work harder to reduce NPLs below its prudential limit of 5.0%.
  • Meanwhile, the capital adequacy ratio, which assesses the strength of a bank’s balance sheet, increased moderately to 14.6% in April 2022 from 14.5% in December 2021. This also shows that the CAR is above its prudential limit.

The CBN distributed N1.01 trillion to farmers under the Anchor Borrowers Program (ABP) in May 2022

  • youUnder the Anchor Borrowers Program (ABP), the Central Bank of Nigeria distributed a total of N1.01 trillion naira to over 4.2 million smallholder farmers growing 21 commodities across the country in May 2022.
  • The Bank added that between April and May 2022, the Bank released the sum of N57.91 billion under the Anchor Borrowers Program (ABP) for 185,972 new projects.

MARKETS

Shares

The Nigerian stock market closed on a bearish note during the week, with the all-stock index down 2.18% from the previous week’s 54,085.3 basis points to close at 52,908.24. base on Friday, May 3, 2022.

The sell-offs in shares of Conoil, Wema Bank and Presco weighed on the market, with the company‘s shares falling 15.04%, 12.33% and 10% respectively.

During the week under review, a total turnover of 28.74 billion shares worth N209.1 billion in 23,688 trades were traded by investors on the Stock Exchange floor, unlike a total of 1.84 billion shares worth N27.29 billion that traded hands. last week in 27,273 offers.


CRYPTOCURRENCY

Play-and-Earn Platform Kryptomon Raises $10M Despite Market Turmoil

  • Play-and-Earn platform Kryptomon, a metaverse gaming platform described as an NFT-powered living gaming project that combines the unique features of Pokemon, Tamagotchi and CryptoKitties, has raised $10 million in a private financing cycle.
  • The funding round was led by NFX with additional support from PLAYSTUDIOS, Griffin Gaming Partners, Tal Ventures and former Citigroup CEO Vikram Pandit.
  • According to the announcement, the funds raised will be used to propel the development of Kryptomon’s Living NFT Game, the first-ever in the NFT game industry that integrates real-world gaming with Metaverse capabilities.

Kanye West’s Yeezus Files for NFT Trademarks

  • One of the world’s most renowned rap artists, Kanye West, has filed 17 trademark applications for his Yeezus brand, indicating a possible move into the NFT space by the artist who has 75 Grammy nominations and has won the award 24 times.
  • However, the claims, dated May 27, come months after West criticized non-fungible tokens in a now-deleted Instagram post in February.
  • The applications, accessible through the US Patent and Trademark Office, mention “non-fungible blockchain-based collectibles, assets, currencies and tokens” and “online retail store services offering downloadable movies, videos, television, music, entertainment and digital art”.

Bitcoin miners are now selling their holdings as the bear market persists

  • It looks like the bear market is hitting every sector of the cryptocurrency space, including those responsible for validating transactions and maintaining the network integrity of the Bitcoin network.
  • Data from Compass Mining reveals that Bitcoin miners are selling their mined tokens as the falling bitcoin price wipes out the profit margins of these miners.
  • It comes at a time when capital markets are turning less friendly, with major indices officially entering a bear market, having lost 20% or more this year.

Japan Passes Stablecoin Bill Focused on Investor Protection

  • Japan, a country in Northeast Asia, is becoming one of the first major economies to introduce a legal framework surrounding stablecoins.
  • This comes at a time when pertinent questions have been asked about the backings of many of the existing stablecoins, following the fall of the Terra blockchain programmable stablecoin, UST, which lost its peg to the US dollar.
  • Japanese lawmakers have passed a bill clarifying the legal status of stablecoins, essentially defining them as digital currency. According to the new law, stablecoins must be pegged to yen or another legal tender and guarantee holders the right to redeem them at face value.

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