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Pound to US Dollar Poised to Sell Off Over Next Five Days - PSL

MAY 15, 2017

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  • Written by Joaquin Monfort

GBP/USD rose to within a hair's breadth of the psychologically significant 1.3000 level before rolling over last week and given price action so far, this may be the precursor to a deeper sell off in the coming week.

The pair has formed a topping pattern clearly visible on the four-hour chart, which suggests a strong possibility of further downside.

The pattern is probably what is known amongst technicians as an ending diagonal.

These occur at the end of uptrends and often signal an imminent and strong sell-off in the pair and a reversal of the trend on a higher timeframe.

Below is an idealized image of an ending diagonal and a ‘real’ ending diagonal on EUR/USD as well as the sell-off which followed.

GBPUSDMay14diagideal

GBPUSDMay14diag

These images look very similar to the ending diagonal which appears to be forming on GBP/USD.

The pattern on GBP/USD shows a truncated or incomplete wave 4 – and therefore is not ideal – however some license is allowed in identification.

GBPUSDMay14

The exchange rate has already broken below the lower borderline of the pattern before recovering back up to it.

This is probably what is known as a ‘throwback’, which is the move back to a trendline or pattern border immediately after a breakout has occurred.

These moves almost always result in a resumption direction of the breakout after the exchange rate has said its ‘final goodbye’ or ‘air kiss goodbye’ as it is often referred to by traders, to the trend or borderline.

These are optimum entry points for traders seeking the alchemy of low risk – high reward.

The breakdown and throwback suggests a continuation lower in the week ahead.

The MACD is also very bearishly aligned and now below the zeroline which indicates a change of trend in the traditional interpretation of the indicator, as expressed by its originator Gerald Appel.

We have taken the height of the pattern at its widest point (a) to calculate the potential downside (b), in a method similar to forecasting the extent of a triangle’s breakout.

This appears to forecast a target at around 1.2760, where support kicks in from the monthly pivot.

For confirmation of more downside, however, we would first want to see a break below the 1.2845 lows.

Data for the Dollar

It is a relatively quiet week ahead on the hard data front for the US Dollar.

Building Permits are the first tier-one release and are scheduled to come out on Tuesday, May 16 at 13.30 (BST).

They are expected to show a rise to 1.27m in April.

Housing data has generally been strong lately, suggesting a more upside.

Housing Starts, out at the same time, are forecast to show a rise of 1.26m from a previous result of 1.215m.

The next big release is the Philadelphia Fed Manufacturing Index, out on Thursday at 13.30 which is expected to show a decline to 19.8 from 22.00 previously.

Other data of note is New York Manufacturing, out at 13.30 on Monday and Net flows of financial investments (Net TIC flows) at 21.00, which is forecast to show a rising surplus of inflows into USD.

The Dollar is at risk of downside as expectations of 2 or even 3 hikes in 2017 have started to shift from the reality of slightly below expectations data releases.

“There’s a serious misalignment between U.S. data, market expectations and Fed speak. Friday’s U.S. economic reports raise questions about the possibility of a rate hike in June,” said Kathy Lien in her week ahead report.

Data for the Pound

Retails Sales, on Thursday, May 18 at 9.30 (BST) will probably be the most significant release in the week ahead as it covers the UK economy’s current weak spot.

Consumer spending has slowed in the first quarter as the weak pound has put pushed up the price of many imports leading shoppers to limit the size of their baskets.

This slowdown in the high street is a major concern as if it continues it will depress economic growth significantly given that it accounts for the largest proportion of GDP.

Slower growth will lessen even further the likelihood of the Bank of England (BOE) bringing forward the time when they will raise interest rates.

Given relatively higher interest rates tend to attract more capital flows which increase demand for a currency the pound stands to lose out if the BOE adopt a more dovish tone – which by dovish means more inclined to cut rather than raise interest rates.

Inflation data, on Tuesday, May 16 at  9.30 is the other major release for the currency, as it too could impact on rate setting.

Headline CPI is expected to show a 2.6% rise compared to April last year and 0.4% on a monthly basis.

Unemployment and Earnings data are out on Wednesday at 9.30 and are forecast to show earnings rise by 2.4% compared to March 2016 whilst the unemployment rate is expected to remain unchanged at 4.7%.

The change in those seeking unemployment benefits, meanwhile, is expected to show a rise of 5k in April.

All three of these releases could impact heavily on sterling if they come out very different from expectations, with Kathy Lien of BK asset management, for one, seeing an upside bias to the releases:

“We expect most of these reports to surprise to the upside, particularly the labor data as the PMIs report some of the strongest conditions in the labor market this year,” said Lien. 

FG, regulators need proactive measures to attract diversified investors – VANGUARD

MAY 15, 2017

The Managing Director and Chief Executive Officer of Solid -Rock Securities and Investment Plc, Mr. Patrick Ezeagu, in this interview spoke on what regulators and the government can do to attract diversified investors to boost the Nigerian capital market.  

By Peter Egwuatu

 

WHAT kind of actions would you like the regulators to adopt that can attract investors to the market?

If the Federal Government remains committed to the financing of infrastructure deficit; this can done through the capital market. One of the major challenges businesses are facing is poor infrastructure which consume a large chunk of their revenues. The Federal Government should ensure that the capital expenditure of the 2017 budget is dedicated to improving infrastructure to enhance the ease of doing business in the country and for businesses to become productive and move towards economic recovery.

In addition, a time has come when the federal Government should involve the capital market regulators and operators in the build -up to budgetary processes and procedures in view of the pivotal role of the market to the  growth and development of the economy.

The market is  a reservoir of cheap and long term funds which is required for long term development of any nation. The capital market serves as a buffer zone for the government to finance budget deficit and there is a correlation between the development of the economy and its capital market. 

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Managing Director and Chief Executive Officer of Solid -Rock Securities and Investment Plc, Mr. Patrick Ezeagu

What are the effects of high exchange rate and inflation rate on investment in the stock market?

High exchange rate and inflation are the twin evils that afflict the capital market and indeed every economic endeavour. For a start, these two variables introduce a high level of uncertainty to the price structures of the market. Secondly, they stifle savings which is the fulcrum of investment. Any phenomenon that negatively impacts on savings reduces the quantum of available investible fund for Capital Market investment. Thirdly, it hits the foreign portfolio investors as they face Exchange rate risk with their investment, especially,  with respect to repatriation of dividend or capital or both.

As a result, one of the main reasons why our capital market has been witnessing low patronage is attributable to the impact of both inflation and the uncomfortable high exchange rate regime. However, I am glad that the CBN is coming to terms with the need to free the strangulating hold it has on the rate to enable the Naira find its market determined exchange rate with the other currencies.

In this way, both investors in the capital market and other users of FX can be relatively assured of a band within which they can benchmark their exchange rate. The flip side is that inflation shall also be contained in the process as the economy and particularly the capital market inches towards a full free market determined price structures.

How can the governments at all tiers utilize the Capital Market to finance the economy?

Government at all levels utilizes the Capital Market to finance the economy because it provides an alternative source of funding that can complement Internally Generated Revenue (IGR). Capital Market fund is relatively cheaper than any other means of funding and has a longer maturity period.

There are various investments/windows available to both Federal and States governments in accessing funding from the market, these include asset sale, bond issuance such as Sovereign, Sub-national, green bonds, etc. These debt instruments are available and governments at various tiers are at liberty to fund infrastructural development using either or a combination of these types of instruments.

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Euro zone recovery, Macron win give ECB chance to consider unwinding policy - BLOOMBERG

MAY 15, 2017

May 13 An economic recovery and robust outlook in the euro zone mean the European Central Bank may be able to look at normalising its ultra-loose monetary policy, German Bundesbank President Jens Weidmann said on Saturday.

Weidmann, one of the most conservative ECB policymakers, said the election of Emmanuel Macron as French president should give the single currency bloc an additional economic boost.

"The strengthening economic development in the euro zone and the robust outlook make a normalisation (of monetary policy) conceivable," Weidmann said at a meeting of the financial leaders of seven leading world economies in Bari, Italy.

But he said a rise in inflation should become more sustainable before the ECB considers such a move.

He added Macron's victory in France's presidential election should help boost growth in the euro zone. Macron won on a platform of reforming France and a business-friendly vision of European integration.

"The election victory of Macron gives a chance that the euro zone economy gets an additional momentum," Weidmann said. (Reporting by Gernot Heller; Writing by Joseph Nasr; Editing by Mark Potter)

Euro zone recovery, Macron win give ECB chance to consider unwinding policy - BLOOMBERG

MAY 15, 2017

BY Alexandria Arnold and Dennis Pettit

 

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  • Friday drop halves dollar’s weekly gain; euro retakes 1.0900

  • Treasury yields near lows for the week as rate-hike bets pared

The dollar fell for a third day after April U.S. retail sales and consumer price data missed estimates, paring its first weekly gain since the start of last month.

The greenback shed modest early gains to trade lower by 0.3 percent. Friday’s dollar drop breached technical support at the 200-DMA for the Bloomberg dollar index, opening the risk of further declines. The dollar fell versus most of its G-10 peers, losing the most against the Swiss franc, which saw broad gains late in the European session.

  • USD/CHF fell as much as 0.9% to below 1.0000, its steepest decline in three weeks, as the CHF advanced vs all of its G-10 peers. CHF gain came amid very muted flows, appeared to be position-driven rather than headline-driven, a trader in London said; position unwinds likely due to inability of EUR/CHF to add gains after a report that the ECB could begin signaling a policy shift around mid-year caught players wrong-footed, the trader said
  • EUR/USD rose to a fresh session high at 1.0934 following the data and remained close by after eclipsing the overnight high at 1.0878. Offers to sell EUR are stacked from 1.0925 to 1.0950, the high of a range that prevailed in the run-up to the French presidential election. The euro is expected to find further offers around 1.1000 and likely near the Monday high at 1.1023 that was seen in Asian trading as the French election outcome became clear
  • ECB’s Praet and Angeloni speak on Monday; traders will watch to see if there is any pushback from the ECB officials to the report on policy signaling. ECB’s Constancio reiterated Thursday that the bank’s policy path is set until year-end though signaling of future steps could begin in the fall
  • USD/JPY is trading ~113.43 after reaching a session low of 113.20. The USD was undercut by a decline in Treasury yields that came as traders pared back bets for a June rate hike after the CPI miss. Stop-loss sell orders were triggered below 113.50, said a trader in London familiar with the transactions who asked not to be identified because not authorized to speak publicly
  • Traders parsed remarks from Fed officials to see whether Friday’s economic reports may have caused a shift in sentiment amid still-high market expectations for a June rate rise. Chicago Fed President Charles Evans said that his view is that downside risks to inflation “still predominate,” though the U.S. is probably at full employment. Philadelphia Fed President Patrick Harker, also a voter this year on the FOMC, said he sees “very little slack” left in the U.S. labor market
  • April retail sales rose 0.4% overall vs estimates for a gain of 0.6% and with an upward revision to the prior month offsetting the miss. At the same time, April CPI rose 0.2% overall, matching estimates, though the ex-food and energy component rose only 0.1% vs estimates for a gain of 0.2%. The dollar was little moved by UofMich sentiment at 97.7 vs est. 97.0

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Dollar starts week under shadow of underwhelming data, North Korea - REUTERS

MAY 15, 2017

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The dollar started the week on the defensive on Monday, after U.S. economic data came in shy of expectations and another missile test by North Korea over the weekend underpinned the perceived safe-haven yen.

The dollar index, which tracks the greenback against a basket of six major rivals, was slightly lower on the day at 99.226 .DXY

The dollar slipped 0.1 percent against its Japanese counterpart to 113.28 yen JPY=.

On Monday, North Korea said it had successfully conducted a newly developed mid-to-long range missile test on Sunday, supervised by leader Kim Jong Un and aimed at verifying the capability to carry a "large scale heavy nuclear warhead," according to the North's official KCNA news agency.

The North fired a ballistic missile that landed in the sea near Russia on Sunday in a launch that Washington called a message to South Korea, days after its new president took office pledging to engage Pyongyang in dialogue.

On Friday, U.S. data showed a smaller-than-expected 0.4 percent increase in April retail sales from the previous month, while a disappointing report on consumer prices raised concerns about the retail sector and the broader economy.

"The data was weaker than expected, but not weak enough to keep the dollar under pressure for long," said Mitsuo Imaizumi, Tokyo-based chief foreign-exchange strategist for Daiwa Securities.

"The North Korean missile news over the weekend gave the yen some lift, but not much," he said. "Overall, we see the dollar trading in its recent ranges for the time being, with investors focused on next month's FOMC meeting."

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The Federal Reserve is widely expected to raise interest rates at its meeting next month. The central bank has forecast two more hikes this year after a quarter point increase in March.

The euro edged down 0.1 percent to $1.0924 EUR=.

Net dollar long positions fell in the week ended May 9 to their lowest since early October, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday. [IMM/FX]

In that week, the euro marked its first net long positioning since early May 2014, as investors breathed a collective sigh of relief following pro-European Emmanuel Macron's victory over anti-EU candidate Marine Le Pen in the second round of France's presidential election on May 7.

 

(Reporting by Tokyo markets team; Editing by Shri Navaratnam)

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FOREX: CBN assures of more interventions - WORLD STAGE

MAY 14, 2017

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WorldStage Newsonline--  In spite of a lull in FOREX trading activities towards the end of last week, the Central Bank of Nigeria (CBN) has assured of its continued intervention in the inter-bank market.

A CBN source revealed that the bank was determined to ensure that the gains made by it in recent times, with regards to the stability of the exchange rate, are not eroded. 

The bank did not make major interventions all through the week ending May 12, 2017, because there was a surfeit of foreign exchange in the system, while the source maintained that the CBN would continue to make necessary interventions to ensure the stability of the naira.

The windows established by the CBN for Small and Medium Enterprises (SMEs) as well as for investors and exporters were said to be yielding the desired results by providing access to forex and easing pressure on the market.

Speaking on the matter, the Acting Director of Corporate Communications at the CBN, Isaac Okorafor reiterated the Bank's commitment to ensure that there is enough supply of forex to genuine customers to achieve the goal of forex rates convergence.

The CBN since February 2017 has been involved in massive interventions in all segments of the interbank market to ensure liquidity and availability of forex.

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Inflation to Maintain Downward Streak in April, Say Analysts - THISDAY

MAY 14, 2017

By Kunle  Aderinokun

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With the expected Tuesday’s release of numbers for April consumer price index (CPI) by the National Bureau of Statistics in view, economic analysts and market watchers have released their projections for the index, which gauges inflation. Essentially, they expect to see a continuation of the downward trajectory in the index, which began in February when it plunged to 17.78 per cent (year-on-year) from 18.72 per cent in January and subsequently dropped to 17.26 per cent in March. NBS had attributed the decline for the two consecutive months to the effects of stabilising prices in already high food and non-food prices as well as favourable base effects over 2016 prices.

While The Economic Intelligence Group of Access Bank Plc forecast that the CPI would drop further to 17.05 per cent in April from  the 17.26 per cent level it stood in March, analysts at FSDH Research  has estimated that the CPI would be 17.11 per cent when NBS released the figures on Tuesday. Also, the CEO, Nigeria Competitiveness Council of Nigeria (NCCN), Matthias Chika Mordi, who is also CEO, Accender Strategies,  estimated a CPI of  16.75 per cent for the month in preview  with a 25 basis points error of margin, based on macroeconomic indicators and Q1 surveys.

 

According to the Access Bank analysts, “As usual, our methodology adopts an autoregressive analysis of past prices, while it recognizes all the assumptions used by the National Bureau of Statistics (NBS) in its computation of monthly composite consumer price index (CCPI).”

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The analysts noted that the group’s inflation forecast was driven chiefly by anticipated downward movement in the food and core sub-indexes. Besides, they identified price movements for major commodity groups in the food basket which makes up over half of the CPI basket remained muted in April. “Based on an independent survey, vegetable oils, rice, and flour trended downwards, while the price of garri, potatoes and noodles were stable.”

Similarly, they stated that, “Core inflation, which excludes the prices of volatile agricultural produce, is expected to extend its downward trend in April. This partially reflects the effects of currency appreciation in the parallel market. Month-on-month, the naira appreciated by 8.32 per cent as the Central Bank maintained the tempo of interventions in the forex market.”

On probable market impact of the projected further inflation decline, The Economic Intelligence Group noted that, “With short-term secondary market T-bill yields currently around 16 per cent – 19 per cent, the downtick in inflation may prompt investors to take positions in short term securities and divest from equities.

They also said, “Despite the easing inflation, we expect the apex bank to maintain rates in an attempt to anchor the downward inflation trend. In the March Monetary Policy Committee (MPC) statement, the CBN governor made it clear that loosening the policy rate will worsen price pressures, while tightening of rates would be detrimental to already-weak economic growth.”

As for the FSDH analysts, they said, “Although we noticed increases in the prices of food and non-food classification for the fourth consecutive month, the base effect in the CCPI in April 2016 will be responsible for the drop in the inflation rate.”

According to them, “The Naira gained by 0.16 per cent at the inter-bank market to close at US$/N305.85 while it lost 0.25 per cent at the parallel market to close at US$/N396 at the end of April. The fall in the international prices of food helped to counter the effect of the depreciation in the value of the Naira at the parallel market.

“The appreciation of the Naira in the inter-bank market and the drop in the prices of food at the international market led to a moderation in the prices of consumer goods in Nigeria. The prices of food items that FSDH Research monitored in April 2017 moved in varying directions. The prices of tomatoes, garri, sweet potatoes, beans, Irish potatoes and yam were up by 56.78 per cent, 8.47 per cent, 6.94 per cent, 6.08 per cent, 5.64 per cent and 3.33 per cent respectively.

“Meanwhile, the prices of onions, vegetable oil, palm oil, rice, meat and fish were down by 27.11 per cent, 7.78 per cent, 6.67 per cent, 2.48 per cent, 2.22 per cent and 1.33 per cent respectively. The movement in the prices of food items during the month resulted in 2 per cent increase in our Food and Non-Alcoholic Index to 234.34 points.

“We also noticed increase in the prices of Housing, Water, Electricity, Gas & Other Fuels divisions between March 2017 and April 2017. Our model indicates that the general price movements in the consumer goods and services in April 2017 would increase the Composite Consumer Price Index (CCPI) to 226.01 points, representing a month-on-month increase of 1.48 per cent.

“We estimate that the increase in the CCPI in April will produce an inflation rate of 17.11 per cent lower than the 17.26 per cent recorded in March 2017.”

In their view, analysts at Eczellon Capital expect the April 2017 inflation rate (year-on-year) “to ease slightly given the marginal drop in the prices of some food and non-food items and CBN’s intervention in the Forex market.”

“Consequently, the Apex Bank had introduced an Investors and Exporters Window (IEW) poised to boost liquidity in the FX market and ensure timely execution and settlement of eligible transactions for manufacturers and related constituents. Prior to CBN’s intervention, the cost of accessing the FX was extremely high as it was mirrored in the prices of items. “Conversely, participants in the FX market are now accessing the FX via the CBN’s IEW at a relatively affordable price and without exhausting same. By implication, the IEW has led to the reduction in cost of production and has translated to the marginal decline in the prices of items. Additionally, the recent manufacturing PMI for April 2017 indicates that the manufacturing sector had advanced at 51.1 index points showing expansion in the manufacturing sector after three months of contraction, though the non-manufacturing sector dragged sluggishly at 49.5 relative to 47.1 index points. Subsequently, the improvements in these sectors spur us to believe that the costs of items in the market are retracting gradually,” the analysts explained. 

Furthermore, the Eczellon Capital analysts added, “the historical behaviour of Nigeria’s inflation rate over the past three months had shown a downward trajectory of 0.94 per cent point and 0.52 per cent point for February and March apiece. For that reason, we foresee the CPI plunging further in April 2017.”

Also, in his projection, Chief Executive Officer, The CFG Advisory Ltd, Adetilewa Adebajo, is hopeful of a continuity in the downward trend in CPI “provided the CBN continues with its policies aimed at improving forex liquidity, Naira/$ rate appreciates further, and fiscal stimulus is maintained.” 

“We can therefore estimate a further downward trajectory in consumer price index, however, by smaller percentage points relative to the first two months, due to relative stability in prices of some food items and falling demand for other items. 

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“Month-to-Month inflation still on the rise. There appears to be the need to monitor CPI for the next few months to fully ascertain the downward trend in inflation,” Adebajo pointed out.

“Month-to-Month inflation still on the rise. There appears to be the need to monitor CPI for the next few months to fully ascertain the downward trend in inflation,” Adebajo pointed out.

BRIEFS

Domestic Flight

 Domestic flight operations declined by 67 per cent in the first quarter of 2017, compared to the same period in 2016, the Nigerian Civil Aviation Authority said. NCAA’s Consumer Protection Department, in a document on Monday, disclosed that 10,366 flights operated in the first quarter of 2017 compared to 15,434 flights operated in 2016 by the same eight domestic airlines. The domestic airlines, the agency said, are Aero Contractors, Arik Air, Air Peace, Azman Air, Dana Air, First Nation, Med-View, and Overland.

 

Gas supply

 Nigerian National Petroleum Corporation and its partners evolved a scheme to grow gas supply for domestic consumption by 285 per cent. NNPC said this in a statement by its Group General Manager, Group Public Affairs Division, Ndu Ughamadu, in Abuja on Wednesday. Ughamadu said the gas growth was expected to rise from three billion standard cubic feet per day (scf/d) to five billion standard cubic feet per day (scf/d) by 2020. NNPC said the federal government had directed it to aggressively pursue gas development to aid the country’s economic development.

 

BoI

 The Bank of Industry introduced zero-interest loans for members of the National Youth Service Corps under its Graduate Entrepreneurship Fund programme. BOI said the zero per cent interest, from 9% previously charged, was part of measures to encourage entrepreneurship and aid business growth. According to BOI, the GEF scheme, being implemented in partnership with the NYSC, is currently on the second edition and has recorded over N262.9 million disbursements to 177 successful candidates. The bank said the zero per cent interest charge took effect from May 1.

 

Capital Market 

Securities and Exchange Commission set aside N5 billion as seed capital for the take-off of the proposed Nigerian Capital Market Development Fund. The commission warned that it would henceforth prosecute investors who use false identity for share subscription. The apex capital market authority also indicated that its shares dematerialisation programme had run its full course, achieving a 100 per cent dematerialisation of shares with over 2.2 million investors mandating their accounts for e-dividend.

 

Leasing industry

Leasing firms in the country braved the odds and generated N1.26 trillion in 2016. The industry recorded 14 per cent growth in outstanding lease volume from N1.1 trillion in 2015. Consequently, experts believed the Nigerian leasing industry had remained vibrant and continued to provide succour to many organisations across all sectors of the economy, despite the current economic difficulties. Stakeholders said leasing was still attractive to new investors with massive diversification by existing players in the industry.

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NAFEX: The Nigerian Autonomous Foreign Exchange Rate Fixing Methodology - FMDQ

APRIL 24, 2017

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1. INTRODUCTION

This document provides a summary of the methodology that FMDQ OTC Securities Exchange (“FMDQ”) applies to establish NAFEX - the Nigerian Autonomous Foreign Exchange Rate Fixing.

2. BACKGROUND FMDQ

This is an over-the-counter (“OTC”) securities exchange with a mission to empower the financial markets to be innovative and credible, in support of the Nigerian economy. This mission is achieved by providing the secondary market with a world-class market governance and development service to the benefit of market participants and in support of the objectives of the financial services regulators.

Consequently, FMDQ is committed to developing and publishing independent and transparent benchmarks which are reasonably designed to be reflective of the market at the time of the fix and promote transparency in the OTC markets. FMDQ Fixings meet the requirements of domestic regulations as well as the International Organisation of Securities Commissions (“IOSCO”) Principles for Financial Benchmarks on governance, quality of the methodology and accountability mechanisms.

NAFEX is the FMDQ benchmark rate for Foreign Exchange (“FX”) spot operations in the Investors’ & Exporters’ FX Window (hereinafter referred to as the “Window”). NAFEX is designed and generated independently and objectively and also published every business day at a specific time.

2.1. Uses of NAFEX

An FX fixing is an essential component of the Nigerian financial system. Its importance to the financial industry and other non-financial sectors arises from the impact of a country’s exchange rate on almost all sectors of the economy.

NAFEX will benefit the Nigerian economy in general and the financial industry in particular in a number of ways, including:

▪ Serving as a fixing for the settlement of FX derivatives

▪ Promoting transparency and awareness of USD/NGN rates

▪ Enabling foreign and local investors benefit from a market-driven independent reference rate

▪ Increasing forward contracts usage towards a reduction of investments in currency principals and foreign currency line utilisation

▪ Developing hedge products and derivatives, thus improving the standard of the Nigerian FX market

▪ Providing growth and income potentials for market players through the trading of hedging products ▪ Serving as a benchmark for portfolio valuations, conversions, performance measurement and audits.

2.2. Key Considerations

2.2.1. Benchmark Administrator FMDQ is the benchmark administrator for NAFEX and thus has primary responsibility for all aspects of the benchmark determination process. This process includes the development, determination, dissemination, operation and governance of NAFEX.

2.2.2. Active Market

FMDQ recognises that to enable the publication of a meaningful benchmark, a market in the currency pair represented by the benchmark must genuinely exist and that market must be active. However, the economic realities will dictate the relative meaning of what ‘active’ means, as market liquidity can vary significantly at particular times of the day. FMDQ applies the IOSCO Principles for Financial Benchmarks 7 & 8 – “Data Sufficiency” & “Hierarchy of Data Inputs” in determining thresholds for an “active market.”

2.2.3. Data Sourcing

FMDQ may use transactional data entered into on an arm’s length basis between buyers and sellers in the market, where that data is available and reflects sufficient liquidity. In a market where liquidity levels are low, the benchmark may be based predominantly or exclusively on contributed quotes.

2.2.4. Governance and Transparency

FMDQ is subject to a corporate risk framework which is based on three (3) lines of risk management:

i. Business procedures and controls are designed to promote consistency throughout the process

ii. The application of independent governance, reporting and risk management. The Board of Directors and relevant Board Committees are responsible for oversight of FMDQ Fixings, including reviewing and advising on the policies and methodologies by which FMDQ calculates, administers and publishes the Fixing.

iii. FMDQ Fixings are discussed and adopted by an Oversight Committee i.e. the Market Review Committee, consisting of members of the FMDQ Management Team who perform the required due diligence on the proprietary Fixings. Furthermore, in line with the IOSCO Principles for Financial Benchmarks, FMDQ shall publish submitted quotes received from contributing banks with the eliminated quotes identified.

2.2.5. Exercise of Expert Judgment

FMDQ may exercise discretion on the use of data in determining a Fixing. The calculation of a Fixing includes a validation process whereby, among other steps, FMDQ reviews data and fixes rates under certain pre-determined tolerance checks. When applying tolerance checks, FMDQ has the discretion (subject to internal policies and procedures) to include or reject certain data from the calculation of the Fixing.

Based on FMDQ’s experience in interpreting market data, FMDQ shall apply expert judgment when necessary with the intent of ensuring the quality and integrity of the benchmark rate. Consequently, FMDQ has put in place internal guidelines and quality control procedures that govern the application of “Expert Judgment” and are intended to provide consistency and oversight to the process.

3. FIXING DYNAMICS

3.1. Fixing Methodology - NAFEX Spot Rate NAFEX Spot rates shall be determined as detailed below and contributing banks shall be expected to submit only ‘professional spot quotes’. Where a contributing bank submits an unprofessional quote, such a quote will automatically be disqualified from the NAFEX computation. Contributing banks shall quote single rates for transaction sizes of $5,000,000.00 and above or as advised by FMDQ, at the time of the poll.

3.1.1. NAFEX is a polled rate based on the submissions of ten (10) contributing banks and calculated using a trimmed arithmetic mean. Upon receipt of quotes, the individual contributing banks’ submission is ranked in descending order. The lowest and highest two (2) quotes are eliminated from the ranked rates leaving only the middle six (6) rates. The arithmetic mean of the remaining rates are then calculated to two (2) decimal places and disseminated as the NAFEX Spot Rate.

3.1.2. NAFEX shall be published daily by 12:00noon. 3.1.3. Where FMDQ receives fewer than the required number of submissions by the time NAFEX is due for publication, the reduced submissions methodology detailed below shall apply: i. NAFEX will be published provided that two (2) or more quotes are obtained on a daily basis ii. The calculation methodology shall remain the same irrespective of the number of submissions received. 

3.13 If data remains insufficient by 12:00 noon, FMDQ shall activate the NAFEX Contingency plan as detailed below.

3.2. Contingency Plan

3.2.1. In instances where there are quotes below the documented threshold, the previous day’s NAFEX shall be maintained and published as the current NAFEX.

3.2.2. In circumstances of a force majeure event, leading to the unavailability of quotes in the market, the previous day’s NAFEX will be maintained and published as the current NAFEX.

3.2.3. Any republished rates from the previous business day shall be identified as such on the FMDQ1 eMarkets Portal.

3.2.4. After five (5) consecutive business days of republishing the previous day’s NAFEX (in this case, the NAFEX of 5 business days prior), an FMDQ Market Review Committee meeting shall be convened in a special session to devise a strategy for the appropriate determination of future NAFEX during the extreme market condition, towards preserving the continuity of the NAFEX publication.

4. PUBLICATION NAFEX

Spot Rate is available in three (3) packages – Real-time, 24-hour Delayed and Historical:

▪ Live Fix: Available at 12:00 noon daily via the FMDQ e-Markets Portal

▪ Delayed (24 hours): Published via the FMDQ website2

▪ Historical: Available via the FMDQ e-Markets Portal

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Pound Sterling Always Rallies in April - but this Year will be Different Warn Analysts - PSL

APRIL 09, 2017
  • Written by Will Peters

Historically, the British Pound tends to rally in April.

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For the last 12 years without fail, GBP has rallied against the USD with an average monthly gain of 2.2%.

The currency has also done well against the Euro.

The observation has many in the analytical industry understandablyconfident that this April will be no different and that we should therefore expect the UK currency to rise.

But the reasons for this outperformance in April is yet to find any plausible theories and analyst David Bloom at HSBC says he is reluctant to rely upon it and modelling the Pound’s potential direction over coming weeks.

Indeed, Bloom rightly points out that the UK is a very different place in April 2017 than it was in previous Aprils. “The vote for Brexit was a game-changer,” says Bloom.

Bloom does not know why Sterling is favoured by April, but history alone is no reason to suggest this is a set-in-stone rule.

Oliver Harvey at Deutsche Bank says a potential reason for Sterling’s historical outperformance in April relates to dividends.

“After annual reporting in the first quarter, April is often the month when dividends fall due. With over two thirds of FTSE 100 earnings made abroad, cash must be repatriated to pay them,” says Harvey.

Harvey does warn that the divergence between high dividends payments and the declining profitability of UK-listed firms might mean this April’s payouts are limited when compared to previous instances.

The analyst notes that for years now UK corporates have been handing out cash to shareholders at the expense of reinvestment which must at some point be rectified.

As such Deutsche Bank reckon there are many years of underinvestment to catch up with and firms are tipped to hold onto cash which in turn could see less demand for Sterling on global foreign exchange markets.

Added to this, Harvey also notes an increasingly smaller proportion of dividends are being paid back in GBP.

“The share of Sterling dividends is likely to fall further as companies seek to reduce the currency exposure of payouts,” says Harvey. “In short, while the weather is unlikely to improve, sterling's strong April performance may be less of a factor than in the past.”

 

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Sell the Pound on Rallies

HSBC have made a tactical recommendation to clients that they consider selling the British Pound on any rallies in anticipation of an intensification of political risk, the structural headwind of the current account deficit and possible signs of softness in the economic cycle.

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HSBC have previously recommended that GBP-USD is to be sold at 1.2540 - very close to the 1.2450 seen at the time of writing.

“Those not already engaged in GBP may be tempted to wait for better levels to sell, somewhere in the 1.2700-1.2850 region where it last topped out,” says Bloom.

The tactical call to sell the Pound on strength contrasts to the view held at Barclays that the Pound is a buy against the Euro.

We do note the duration of the Barclays call is however shorter in duration.

Economics to Weigh Against Sterling

Looking at the fundamental reasons to engage against Sterling, HSBC eye the mid-March boost given to the currency by the Bank of England which surprised markets by hinting that the next move on interest rates would be to raise them.

One member of the Bank’s decision-making committee - Kristin Forbes - actually voted for a rise at the March meeting.

But, HSBC believe the boost given to GBP from the hawkish shift in rate expectations is vulnerable to a reversal.

“The dissenting vote of Forbes at the last MPC meeting came against a run of upside activity data surprises in January and February,” says Bloom.

Those have now petered out in March with the activity surprise index tracking sideways with leading indicator data turning softer and suggesting a slowdown in economic activity over coming months.

While the upside surprise in inflation data gave an extra boost Sterling  bulls HSBC argue this sentiment is misplaced.

“The rise in inflation is a dovish signal under current circumstances because of the squeeze it poses on real spending power. Wages growth is stuck; inflation is not,” says Bloom.

HSBC think the extra 18bp of tightening the market has added to its expectations for December 2018 are likely to reverse as the data and Bank of England rhetoric delivers a push back.

“This will be significant for GBP/USD as the currency has traded as a cyclical currency so far in 2017, tracking the daily vagaries of the interest rate differential between the UK and US. Once the political risk of an early Brexit negotiation standoff and the structural headwind from the current account deficit are added, we could have all three drivers pointing to GBP weakness,” says Bloom.

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Some Bearish Forecasts for the Pound

HSBC forecast the Pound to Dollar exchange rate to be at 1.15 by mid-2017 ahead of a fall to 1.12 by the end of September and 1.10 by year-end.

The EUR/GBP exchange rate is forecast at 0.91 by mid-2017, 0.96 by September and 1.00 by the end of 2017.

From a Pound to Euro exchange rate perspective this equates to 1.0981, 1.0416 and, well, 1.0.

These are certainly amongst the more bearish forecasts in the analyst community out there and aligns closely to the views held at bears Deutsche Bank.

It might be no wonder then that two major Sterling bears are not buying the idea that the Pound will follow historical precedent and rise this April.

At the time of writing the Pound to Euro exchange rate is quoted at 1.1705.

The Pound to Dollar exchange rate is quoted at 1.2480.

Sterling caught its first tailwind of the week against the dollar thanks to data showing the fastest growth in three months for a sector of the U.K. economy that matters most.

Services growth unexpectedly accelerated in March which for now helped to allay worries of Brexit putting a brake on the economy.

Upside for the Pound could prove limited ahead of more big ticket U.K. numbers in the days ahead on trade, due Friday, and next week when inflation and unemployment print on Tuesday and Wednesday, respectively.

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NAIRA WARS: THE CENTRAL BANK STRIKES BACK - abokiFX

FEBRUARY 25, 2017

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The Central Bank has found new muscle with the introduction of its new FX policy. The policy will see all banks receive a total of $20m weekly, to sell to the public at N375 /$1 thereby reducing the pressure on the parallel market.

CBN suffered the humiliation of not being able to respond to the dire demand for dollars in the country since late 2016 forcing the naira to spiral out of control.

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CBN introduced IMTOs and empowered them to distribute $15,000 per week which was later slashed to $8,000 per week per BDC. AbokiFX field agents confirmed that the $8,000 dollars a week they receive barely last 60 minutes.

abokiFX observed that the Central Bank, who had been pushed to the wall since the start of 2017  decided to fight back aggressively on all fronts by using a combination of spots, forwards, price discounts and media announcements by selling $41m spot rates, $600m forwards contracts at rates below the parallel market and announcing a new FX policy.

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abokiFX believes with a restored reserve approaching the $30bn threshold with further prospects of future growth, there is enough muscle to fight off any speculative demand in the market and ensure moderate liquidity is sustained on a weekly basis through multiple channels.

CBN has also called for back up from the banks to join the fight to strengthen the naira by instructing the banks to be located in BDC territories such as inside the airports, to provide liquidity penetration to customers. AbokiFX sees some conflict of interest occurring here initially but might be mitigated in the long run.

abokiFX research team will monitor closely what the impact of the new FX policy will have on the rates and liquidity volume in the peak seasons, as that would be the real test of the return of the Naira.

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HIGH TRAFFIC BUT LOW CURRENCY VOLUMES - abokiFX Research

FEBRUARY 24, 2017

TODAY'S MARKET OBSERVATION

abokiFX Research   24/02/2017

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  • Market in chaos as rate fluctuation confuses traders.
  • A lot of customers trying to sell but traders not buying at high rates anymore.
  • Traders and customers weeping from loss in exchange rate.
  • Traders are not able to sell existing stock at low rates as the loss would be catastophic.
  • Traders willing to buy are buying limited volumes at discounted rates.
  • Volume traded per individual is low compared to standard trading days.
  • Customers trooping in to sell their stock are not impressed witht the rates. While some deal, others do not. The observed deals are light.
  • The weekend could not have come at a better time for some traders as they try to grasp the reality of the CBN's New FX Policy.

Market observations compiled by abokiFX Research Team.

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PANIC OVERWHELMS THE PARALLEL MARKET AS TRADERS BEAR HEAVY LOSSES - abokiFX

FEBRUARY 24, 2017

Parallel market traders are turning customers away as they refuse to buy any foreign currency.

Those willing to buy off customers are offering low rates for the dollar and refusing to take on any large volume.

Traders are also reluctant to sell at low prices but those that have panicked are willing to offload low volumes as well at $460.

abokiFX  field agents believe that customers who usually source forex from the parallel market are now heading to the banks to take advantage of the reduced rates from the CBN.

abokiFX field agents have confirmed that RATES ARE UNSTABLE AT THE MOMENT AND ADVICE THAT TRADES SHOULD BE DONE OUT OF NECESSITY RATHER THAN PANIC.

FEBRUARY 2017 FOREIGN RESERVES IN USD - AbokiFX CHART

FEBRUARY 18, 2017

BY ABOKIFX RESEARCH

  • FOREIGN RESERVE RECOVERY NOT YET IMPACTING THE EXCHANGE RATE OF THE NAIRA AS NAIRA SPIRALS OUT OF CONTROL. 
  • ABOKIFX RESEARCH TEAM BELIEVES THERE IS A POSSIBLITY THE CENTRAL BANK COULD DEFEND THE NAIRA ONCE A FOREIGN RESERVE THRESHOLD IS REACHED.
  • CRUDE OIL PRODUCTION VOLUME IS AT 2 MILLION BARRELS A DAY WITH OIL PRICE STEADILY ABOVE $50 A BARREL. THIS EXPLAINS THE FAST RECOVERY OF THE RESERVE.
  • abokiFX RESEARCH TEAM WILL WATCH FOR EARLY SIGNS OF CBN INTERVENTION IN THE FX MARKET AS THE CHART SHOWS WE COULD BE HEADING BACK IN THAT DIRECTION. HOW SOON THOUGH, WOULD DEPEND ON A RESERVE THRESHOLD GOOD ENOUGH TO TRIGGER AN INTERVENTION.. 

 

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Expert urges CBN to reduce MPR – The Guardian

FEBRUARY 01, 2017

Dr Samuel Nzekwe, finance expert, has urged the Central Bank of Nigeria to reduce the Monetary Policy Rate currently at 13 per cent in order to boost the economy.

Nzekwe, former President, Association of National Accountants of Nigeria (ANAN), told the News Agency of Nigeria (NAN) on Sunday in Ota, Ogun, that the higher MPR had eroded the purchasing power of most Nigerians.

NAN reports that the Monetary Policy Committee of CBN had at its two-day meeting in Abuja on Tuesday retained the MPR at 13 per cent.

According to him, the interest rate charged by the commercial banks was too high, making businesses difficult to do in the country.

“The Federal Government needs to create enabling environment by providing lower interest rate and address critical infrastructure deficiency for industries to thrive’’, the ex-ANAN boss said.

According to him, Nigeria is experiencing cost push inflation, the result of higher cost of production of goods and services.

Nzekwe said devaluation of the nation’s currency was a major factor that affected the high cost of production.

“Goods and services are available but people have no money to buy them because the recession made people to be worse off’’, he said.

He, therefore, advised the CBN to reduce interest rate so that investors could access cheap loans, reduced cost of production and create more employment.

This, he said, would boost the Gross Domestic Product and eradicate poverty level in the country.

Sterling stumbles to first three-day fall of year – Reuters

JANUARY 30, 2017

By Jemima Kelly and Marc Jones | LONDON

Britain’s pound weakened on Monday, marking its first three-day fall against the dollar this year and putting it on the back foot ahead of Thursday’s first Bank of England meeting of 2017.

“Super Thursday” will see the central bank, which cut interest rates to a record low of 0.25 percent after the June referendum on EU membership, present its quarterly inflation report along with its decision on monetary policy.

Inflation has accelerated as sterling has shed 12 percent since the Brexit vote on a trade-weighted basis. This has led to market talk that the BoE may take a more hawkish tilt and even signal that it is moving closer to raising rates from their current record low of 0.25 percent.

A Reuters poll last week, however, found most economists expect the BoE to leave its rates and other stimulus measures unchanged at least until 2019. Even though it is likely to raise its growth forecasts, uncertainty over soon-to-start Brexit negotiations mean it will likely remain cautious.]

“(Bank of England Governor Mark) Carney will probably reiterate his line that there are limits to tolerance of above-target inflation,” said BNP Paribas currency strategist Sam Lynton-Brown.

“If that rhetoric occurs at the same time of potential upward revisions to growth forecasts and maybe even inflation forecasts, that will prompt the market to increase its pricing for the probability of a Bank of England rate hike by the end of this year.”

Sterling slipped off a five-week high of $1.2674 at the end of last week, and by 1545 GMT on Monday had fallen another 0.2 percent on the day to $1.2525, as worries over a travel plan implemented by U.S. President Donald Trump drove a risk-off mode across markets.

Against a broadly weaker euro, the pound inched up 0.1 percent to 85.13 pence, close to a four-week high.

Crédit Agricole FX Strategist Manuel Oliveri forecast sterling would struggle following a recent mini-rally, with Brexit uncertainty to remain the main driver and data also likely to weaken.

“We don’t think the (BoE) inflation report will be a big shock,” he said. “It may sound a bit more hawkish but it still remains cautious.”

“A lot more is needed to push the needle” for the bank to start considering a move in interest rates, he added.

The pound has fallen roughly 19 percent against the dollar since June’s Brexit vote, but for the last few months it has been in a relatively restrained range of between $1.20 and $1.28 and 84 pence and 88 pence per euro.

(Editing by Richard Lough)

FOREX-U.S. travel ban row halts dollar recovery – Reuters

JANUARY 28, 2017

* Yen moves higher after row over U.S. immigration order

* Moves put focus back on risks of Trump’s protectionism

* Weaker-than-expected U.S. GDP halted dollar gains on Friday

* Monetary policy in focus as BOJ, Fed and BoE meet this week (Adds German inflation data, updates prices)

By Patrick Graham

LONDON, Jan 30 The dollar dipped on Monday as investors sought the traditional security of the Japanese yen after new U.S. immigration curbs put the spotlight back on President Donald Trump’s protectionist bent and the risks it poses for the economy.

The dollar had begun to climb at the end of last week after its worst month in five, as expectations of higher inflation and tax cuts to spur growth under the new president pushed U.S. government bond yields higher.

That was halted by a combination of weaker-than-expected U.S. economic growth data on Friday and the uproar that followed Trump’s order restricting entry to the United States for travelers from seven Muslim-majority nations.

“Concerns on protectionism appear to be rising after President Trump’s executive order to restrict immigration,” said Adam Cole, head of G10 FX strategy with RBC in London.

After an Asian session becalmed by Chinese New Year holidays, the yen rose 0.4 percent to 114.58 yen per dollar in morning trade in Europe. The greenback was flat at $1.0695 per euro and marginally higher at $1.2537 against sterling.

The euro drew some support from a rise in European government bond yields to their highest in a year after regional data showed solid rises in annual German inflation. That came at the start of a week dominated by central bank meetings in the United States, Japan and Britain.

The bond market, however, also suggested euro investors were pricing in more risk from France’s presidential election in April after the selection of a more radical leftist candidate by the French Socialists at the weekend.

A stronger dollar was one of 2017’s big calls for many investment banks and asset managers at the end of last year but that faith has been undermined by worries about how U.S. trade and diplomacy will pan out under Trump’s presidency.

At the top of the list are concerns that the new administration may actively pursue a weaker dollar as part of efforts to change its trading relationship with China and others.

“The weak U.S. GDP is doing the dollar no favours. But it also takes courage to keep buying the dollar, considering what Trump has said about the kind of a currency policy he could pursue,” said Daisuke Karakama, market economist at Mizuho Bank in Tokyo.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Additional reporting by Shinichi Saoshiro in Tokyo; Editing by Gareth Jones)

Forex: Naira appreciation in forwards market indicates rising confidence – Vanguard

FEBRUARY 01, 2016

By Babajide Komolafe

THE naira appreciated in the forwards segment of the foreign exchange market indicating rising confidence buoyed by recent increases in the nation’s foreign reserves. ADVERTISING Meanwhile, prices of Nigeria’s Eurobond maintained downward trend for the third consecutive week due to persistent selling pressure. Naira appreciates in forwards market Data from the Financial Dealers Market Quote (FMDQ) show that the naira exchange rate for one month forward contracts dropped to N315.34 on Friday from N320.18 per dollar the previous week, indicating N4.84 or 1.5 percent appreciation for the naira. Highest appreciation Similarly, exchange rate for two months forward contracts dropped to N323.27 from N330.54 per dollar, indicating N7.27 or 2.20 per cent appreciation for the naira.

The naira also appreciated by N14.57 or 4.20 percent for three months forward contracts, as the exchange rate dropped to N331.53 from N346.1 per dollar. Naira The naira recorded its highest appreciation for six months forward contracts, appreciating by N29 or 7.67 per cent, as the exchange rate dropped to N323.27 from N378 per dollar. The naira also recorded marginal appreciation of 0.08 percent for spot transactions where the exchange rate edged down to N305.25 per dollar from N305.5 per dollar in the previous week.

According to analysts at Cowry Assets Management Limited, the naira appreciation in the forwards market suggests future stability in the foreign exchange market amidst rising foreign reserves. The nation’s foreign reserves have been an  upward trajectory since October 18th 2016 courtesy of increase in crude oil prices inspired by the production cut deal agreed by OPEC members. According to data by the Central Bank of Nigeria (CBN), the foreign reserves rose by $5 billion from $23.96 billion on October 18th 2016 to $28.9 billion on Tuesday January 24th 2017.

CBN defends forex policy CBN Governor, Mr. Godwin Emefiele however insisted that the apex bank would maintain its policy of selling 60 percent of available foreign exchange to manufacturers, and continued to intervene in the interbank foreign exchange market to moderate the exchange rate of the naira. Addressing the press on the outcome of the Monetary Policy Committee (MPC) meeting on Tuesday, Emefiele said: “I am happy to say that het reserve today is $28.9 billion. It is exciting to see this happen.   But is there a need to float the Naira?   It is important to note that we have to manage the reserve.    

That means from time to time we will intervene in the market to make sure the exchange rate does not go beyond our expectations   and those interventions will be to moderate the rates as necessary. “The fact that we have begun to see some accretions to the reserves does not mean we have to be reckless.   We will continue the policy of ensuring that foreign exchange is made available to those who are importing raw materials, plants and equipment, those supporting the agricultural sector and not those who want to engage in what I can regard as less important sectors.” Eurobond maintains downward trajectory On the other hand, prices of Nigeria’s Eurobond dropped for the third consecutive week, indicating investors may be dumping the bonds.

According to the closing prices and yields of Nigeria’s Eurobond posted by the Debt Management Office (DMO): The 10-year, 6.75 percent Jan 28, 2021 bond lost $.68 while the yield rose to 5.932 percent; the 5-year, 5.13 percent July 12, 2018 bonds lost $.32 while the yield rose to 3.67 per cent; the 10-year, 6.38 per cent July 12, 2023 also lost $0.77 while the yield rose to 6.59 per cent. CBN to sell N242bn treasury bills Meanwhile the CBN will this week sell treasury bills worth N242.4 billion in continuation of liquidity mop up operations.

The treasury bills comprise N45.18 billion worth of 91 day bills, N80 billion worth of 182 days bills, and N117.2 billion worth of 364 days bills. This of course is to moderate the liquidity effect of the inflow of N218.36 billion through payment for matured treasury bills this week. The matured treasury bills comprise N21.15 billion worth of 91 days bills, N80 billion worth of 182 days bills, N117.2 billion worth of 364 bills and N72.9 billion worth of 185 days bills. The combined effect of these developments is expected to moderate down cost of funds in the interbank money market. Last week cost of funds rose marginally despite inflow of N400 billion from statutory allocation funds.

The impact of the inflow was subdued by outflows through treasury bills and FGN bonds auction during the week. Although interest rate on Overnight borrowing dropped  to 5.5 per cent last week from 11.63 percent the previous week, the interest rate for I month, 3 month and 6 month borrowing rose respectively to 17.86 per cent  (from 17.73), 19.50 percent (from 19.12) and 23.14 percent (from 22.21). Seventh OTC FX Futures Contract matures, settles on FMDQ The 7th Naira-settled OTC FX Futures contract, NG/US JAN 25 2017, with amount $274.39 million, matured and settled on Wednesday, January 25, 2017 on FMDQ OTC Securities Exchange, bringing the total value of contracts so far matured on the OTC Exchange to circa $1.80 billion, and about $5.46 billion  worth of OTC FX Futures contracts traded so far.

Designated clearing agent The contract, which stopped trading on Tuesday, January 17, 2017, was valued against the Nigerian Inter-Bank Foreign Exchange Fixing (NIFEX) Spot rate as published by FMDQ on January 25, 2017, with the associated clearing/settlement effected by the FMDQ-designated clearing agent, the Nigeria Inter-Bank Settlement System PLC (NIBSS), in line with the FMDQ OTC FX Futures Market Operational Standards. Whilst businesses, corporates, and other market participants desirous of hedging their FX exposures continue to key into this product, it is expected that the potential of the OTC FX Futures market will be further maximised during the course of the year. The Central Bank of Nigeria (CBN) on the other hand, introduced a new contract, NGUS JAN 31 2018, for $1.00bn at $/N281.50 to replace the matured contract and also repriced its quotes on the existing one to 11-month contracts.

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