One of the multinational companies in Nigeria has lamented on the high rate of the U.S dollar in the black market which has crept into its profit earnings.
PZ Cussons Plc says it is paying as much as 70 per cent more than the official rate for dollars as the Central Bank of Nigeria trading restrictions reduce availability of foreign currency in Africa’s biggest economy, according to the Punch.
“Whilst the official naira exchange rate continues to be stable, a lack of availability at that rate is resulting in the majority of dollars being purchased at a premium of 50 per cent to 70 per cent,” the Manchester-based maker of Imperial Leather soap said in a trading update on Thursday.
“The resultant cost impact is being managed through changes to relative pricing in an environment where trading conditions remain challenging. The situation in Nigeria remains extremely fluid,” it added.
Bloomberg reports that while oil revenue and exports have plummeted since 2014, the Governor of the CBN, Godwin Emefiele, and President Muhammadu Buhari have refused to let the naira weaken. They have pegged it since March 2015 at 197-199 against the dollar through currency-trading and import restrictions that have deterred foreign investment and made it tough for manufacturers to buy inputs from abroad.
The black market rate has fallen to 320, around the level PZ Cussons implies it is buying dollars.
Listed companies in Nigeria still try and source foreign exchange from their banks at the official rate, even though it is becoming harder.
Unilever Plc, which like PZ Cussons has a subsidiary trading on the Nigerian Stock Exchange, said last month it would be “very insane” for the country to persist with the currency policies.
Nestle SA said its local unit has had to widen the number of banks it uses so that it can access enough foreign exchange. Last year, it was waiting as long as six weeks to be allocated dollars, according to Renaissance Capital Limited analysts.
PZ Cussons Nigeria Plc’s shares have fallen 8.6 per cent to N23.50 this year. The country’s All Share Index has dropped by 14 per cent, the fifth-most globally among 93 indexes tracked by Bloomberg.
“Whilst the official naira exchange rate continues to be stable, a lack of availability at that rate is resulting in the majority of dollars being purchased at a premium of 50 per cent to 70 per cent,” the Manchester-based maker of Imperial Leather soap said in a trading update on Thursday.
“The resultant cost impact is being managed through changes to relative pricing in an environment where trading conditions remain challenging. The situation in Nigeria remains extremely fluid,” it added.
Bloomberg reports that while oil revenue and exports have plummeted since 2014, the Governor of the CBN, Godwin Emefiele, and President Muhammadu Buhari have refused to let the naira weaken. They have pegged it since March 2015 at 197-199 against the dollar through currency-trading and import restrictions that have deterred foreign investment and made it tough for manufacturers to buy inputs from abroad.
The black market rate has fallen to 320, around the level PZ Cussons implies it is buying dollars.
Listed companies in Nigeria still try and source foreign exchange from their banks at the official rate, even though it is becoming harder.
Unilever Plc, which like PZ Cussons has a subsidiary trading on the Nigerian Stock Exchange, said last month it would be “very insane” for the country to persist with the currency policies.
Nestle SA said its local unit has had to widen the number of banks it uses so that it can access enough foreign exchange. Last year, it was waiting as long as six weeks to be allocated dollars, according to Renaissance Capital Limited analysts.
PZ Cussons Nigeria Plc’s shares have fallen 8.6 per cent to N23.50 this year. The country’s All Share Index has dropped by 14 per cent, the fifth-most globally among 93 indexes tracked by Bloomberg.
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