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FXTM Analysis: BoJ Policy Meeting In Focus

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Financial markets are on standby ahead of Friday’s Bank of Japan (BoJ) monetary policy decision which is widely expected to conclude with unleashing a mammoth 28 trillion Yen stimulus to support the Japanese economy.

For an extended period, Japan has been pressured by the global instability with Prime Minister Shinzo Abe wasting no time in admitting the Brexit shockwaves could threaten the nation further. Risk aversion continues to empower the Yen, ultimately punishing Japanese exports and consequently leading to prolonged periods of static growth and inflation.

Sentiment remains bearish towards Japan and the horrible cocktail of factors stressing the economy could force the BoJ to act swiftly in an effort to regain economic stability.  Although expectations remain high over the bazooka stimulus package, the central bank is notoriously good at surprises with fears already lingering whether any action will be taken.

It should be kept in mind that the persistent uncertainties in the global markets have created a period of central bank caution. Most major banks are on standby amid the negatively morphed financial landscape and this could be the greatest challenged presented to the BoJ.
 

Dollar Stabilizes Post FOMC
The Dollar displayed some stability during trading on Thursday as investors digested the possibility of a US rate increase before year-end. Wednesday’s hawkish tilted FOMC statement has bolstered sentiment towards the Dollar with further appreciations expected as US data improves.

Investors may direct their attention towards the unemployment claims which could compound to the attributes needed for the Fed to make a move in 2016.

US labour continues to display signs of resilience in a period of global uncertainty and if next week’s NFP report follows this pattern then the Fed could be closer to breaking the tradition of central bank caution.

 
Sterling Still pressured
It feels like everything thrown at the Sterling which should elevate its value is swiftly erased by the persistent post-Brexit uncertainty which continues to haunt investor attraction towards the currency.

The downside pressure is intense and this was observed on Wednesday when Sterling bears were unfazed by the positive second quarter GDP results.

Short term Dollar weakness has done little to keep the GBPUSD buoyed with further declines expected as expectations mount over the Bank of England cutting UK interest rates.

From a technical standpoint, the GBPUSD is bearish and a sharp decisive breach below 1.3100 could open a path towards 1.2800.

Commodity Spotlight – WTI Crude
WTI Crude was left vulnerable to further losses on Wednesday following the unexpected builds in crude and gasoline inventories which intensified the concerns over the excessive oversupply of oil in the markets. Prices tumbled to fresh three-month lows at $41.65 and could be poised for further declines as the recurrent oversupply fears haunt investor attraction.

Oil remains fundamentally bearish with prices on route to $40 as the horrible combination of oversupply woes and speculations of faltering demand encourages bearish investors to install a heavy round of selling. From a technical standpoint, the break down below $42 could invite sellers to drag prices lower towards $40.


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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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E-Financial

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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