E-Financial
Naira Steady as IMF Upgrades Nigeria’s Growth Outlook
By Lukman Otunuga, FXTM Research Analyst,
A sense of caution lingered across financial markets after the International Monetary Fund (IMF) cut its global economic growth projection for 2019, to 3.3% from 3.5%.
Risks revolving around US-China trade talks and Brexit have played a leading role in the IMF’s decision to downgrade growth forecasts to their lowest rate since the financial crisis of 2008. Growth forecasts for sub-Saharan Africa this year were also trimmed, to 3.5% from the 3.8% set last October.
Interestingly, the IMF upgraded Nigeria’s growth forecast this year, to 2.1% from the 2.0% forecast made in January. With the nation on a mission to diversify away from Oil reliance and macroeconomic conditions stabilizing, the outlook remains encouraging. With no major economic reports expected from Nigeria this week, the Naira and local stock markets may be influenced by external drivers.
A busy day ahead for the Dollar
The US Dollar may react to some near-term catalysts in the form of the pending March US inflation print, the minutes from last month’s surprisingly dovish Fed meeting that are scheduled for release later today, and Fed Chair Jerome Powell’s speeches over the next three days.
Should any of these events support expectations of a Fed rate cut, with the Fed Funds Futures already expecting a 55 percent chance of a cut by December, that could see the Dollar Index (DXY) sink back towards 96.80. However, any drop would likely be mitigated by the worsening global outlook, which is offering support for the Greenback.
Euro awaits ECB decision…
EURUSD bounced off the 1.12 support level in the lead up to the European Central Bank’s latest monetary policy decision that is due on Wednesday.
Mario Draghi and his fellow policymakers are expected to sit on their hands this month, with little room to maneuver amid significant headwinds. While political tensions in France and Brexit uncertainties are beyond the central bank’s control, these factors have been highlighted by the IMF as putting downward pressure on growth, leaving the ECB to bide for time and watch how these risks manifest themselves in the real economy.
Taking a look at the technical picture, the EURUSD remains in a bearish trend on the weekly charts. There have been consistently lower lows and lower highs while the Moving Average Convergence / Divergence (MACD) trades to the downside. A solid breakdown below 1.120 has the potential to encourage a move lower towards 1.113 and 1.100, respectively. If 1.120 proves to be a reliable support, the technical bounce is seen taking prices back towards 1.135.
Pound complacent even as Brexit summit looms
Pound traders have narrowed the trading range for GBPUSD to between 1.30 and 1.31, even as markets remain on tenterhooks awaiting the next developments surrounding Brexit. The EU is set to hold an emergency Brexit summit on Wednesday, amid expectations that the UK will be told to delay its exit by up to a year.
It remains to be seen whether such a demand is palatable for UK lawmakers and Prime Minister Theresa May, whose request for a short extension to the June 30 was rejected. While a longer extension may avoid stringing markets along with a series of cliff-edge dates, it still doesn’t remove the overall uncertainty as to how and when the UK will exit from the European Union. This implies that the dark clouds of Brexit won’t be clearing up anytime soon, which should continue weighing on the Pound throughout the rest of 2019.
Focusing on the technical picture, the GBPUSD is struggling to keep above 1.3000 on the weekly timeframe. A decisive breakdown and weekly close below this point are likely to open the gates towards 1.2800 in the short to medium term.
E-Financial
Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme
“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.
E-Financial
CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering
Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.
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.
E-Financial
CBN Urges Banks to Expedite Action on Recapitalisation
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.
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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