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Currency Market: Rising Political Uncertainty Weighs On Sentiment

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FXTM Research Analyst Lukman Otunuga comments on WTI Crude was exposed to further losses on Wednesday after the shocking increase in U.S fuel inventories and decline in Chinese demand revived concerns of the excessive oversupply in the global markets.

Stock markets were chaotic this week with most major arenas violently swinging between losses and gains due to the heightening political risks across the globe, escalating Trump developments and ongoing Brexit woes.

Asian markets traded mixed on Wednesday’s the Trump-off trading mood dented investor risk sentiment. With depressed oil prices potentially fuelling the risk aversion, European markets could come under renewed selling pressures in the short term. Wall Street remains gripped by the Trump uncertainty and the sensitivity in American stocks should be expected to rise as investors seek further clues on what policies US President Donald Trump may unravel this week. The threat of protectionist policies impacting global growth and overall political uncertainty eroding risk appetite could leave stock markets vulnerable to heavy losses in the medium to longer term.

Dollar Remains Trumped
The Greenback staged an impressive rebound on Tuesday following hawkish comments from a US Federal Reserve official which reinforced expectations of a US interest rate hike in March.

While the prospects of higher US rates may ensure the Dollar remains buoyed in the medium term, the erratic Trump policies coupled with concerns over protectionism impacting US growth could expose the Greenback to downside risks in the short term.

It should be kept in mind that the driver behind the Dollar’s phenomenal gains was optimism over fiscal policies boosting US growth, and there is now a risk of the currency being sold incessantly if investors are left disappointed.

Technical traders may observe how the Dollar Index trades within the daily bearish channel with a breakdown back below 100.00 encouraging a further decline lower towards 99.00.

Sterling Dictated by Brexit Woes
Sterling was extremely volatile this week as market participants reacted to signs of the UK government giving parliament a stronger say in the critical Brexit negotiations. It has become quite clear that Sterling remains dictated by the Brexit developments with price sensitivity set to heighten in the coming weeks as the article 50 invoke looms.

The overall sentiment towards the Pound remains heavily bearish and uncertainty should provide a solid foundation for sellers to drag the Sterling/Dollar back towards 1.2350. 

From a technical standpoint, the GBPUSD currently resides in a wide range but a breakdown below the pivotal 1.2350 level could encourage a steeper selloff back towards 1.2050.

Commodity Spotlight – Wti Oil
WTI Crude was exposed to further losses on Wednesday after the shocking increase in U.S fuel inventories and decline in Chinese demand revived concerns of the excessive oversupply in the global markets.

The resurgence of U.S shale amid the rising oil could undermine the efforts of OPEC and Non-OPEC members in mitigating the global oversupply consequently leaving oil prices vulnerable.

There is a threat of the OPEC production cut deal falling apart in the future if U.S shale continues to pump incessantly.

Although oil prices were initially buoyed by the optimism over OPEC and Non-OPEC members achieving roughly 82% compliance with its production cut, the big elephant in the room known as U.S shale should limit upside gains.

The breakdown below $52 on WTI could spark a further selloff lower towards $51.


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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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