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Analysis: Nigeria Strengthening Economy Attracts Forex Traders

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The forces behind currency markets and what makes them tick is always an interesting topic, especially when you talk about the Nigerian Naira.

The strength of a country’s currency is often in direct proportion to their fiscal health and political stability, and this can clearly be seen when you look at the Nigerian economy.

The Naira has been battling all kinds of vagaries, such as currency controls imposed by the government and the fallout from a thriving black market, where it trades at a discount to the official rate set by the Central Bank of Nigeria (CBN).

The CBN has made huge efforts to stabilise the currency and has made some inroads. The short-term goal of closing the gap between official and black-market rates has partially been achieved. More good news is that in July 2017, the International Monetary Fund (IMF), projected that Nigeria’s economy will grow at a faster pace than South Africa’s in 2018.

According to its World Economic Outlook, South Africa’s economy is expected to grow at 1.2% and Nigeria’s at 1.9%.  Growth in agriculture, increased oil output and government spending will continue to drive Nigeria’s growth, and strengthen the Naira.

The Naira is an interesting currency to watch, and like most emerging market currencies, it has economic challenges to overcome. As a result of its volatility but increasing stability, it has attracted the attention of investors who want to try their hand at trading.

The volume of global forex traders is steadily growing and it is estimated that in 2016, the volume from retail foreign exchange trading represented 5.5% of the entire foreign exchange market, a massive $282 billion in daily trading turnover.

Despite the increased interest and numbers of newcomers entering the markets, there are many more aspirant traders who feel they do not have the confidence to trade.

Their concern is not misplaced because not all investors have the discipline to thoroughly learn and master the craft of forex trading.

A successful trader has to understand both the technical and fundamental aspects of trading, in other words they need to know that politics, natural disasters and even climate change can affect the value of a currency and that timing is a critical part of trading.

Forex transactions are executed in fractions of a second, and a lack of discipline can cause a trader to take unnecessary risks. Forex brokers have recognised this and acknowledged that some traders need extra support.

To address this issue the industry has developed tools to help traders stick to their strategies. Expert Advisors (EAs) for example, provide traders with a platform to code the parameters of their trading strategies.

EA’s are basically automated trading algorithms and while complex by nature, they are simple to use tools that assist traders to refine their trading strategies and gain a greater potential advantage over the markets.

A novice would not derive much benefit from an EA however, because learning how to code takes tuition and practice.

This is why Copy Trading programmes have become extremely popular – they offer less experienced traders the opportunity to follow the trades of suitable traders, and products like FXTM Invest provide a welcome middle ground.

They are not as technical as an EA, but they enable traders to make decisions based on input from a suitable Strategy Manager.

Copy Trading platforms are beneficial to all parties. Strategy Managers make their trades public and investors copy the strategies to earn on the successful trades; in turn, Strategy Managers then take a commission from the Investors.

Products like this will continue to evolve and attract individuals into the Forex markets because they give traders at all levels the opportunity to increase their earnings from profitable trades.

As the financial markets in Nigeria continue to evolve and the Naira gets closer to becoming a stable and respected currency, so will the interest in Forex trading grow.

FXTM regards Nigeria as one of their most important markets and will continue to evolve products, and provide education to assist traders in this region.


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E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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