E-Financial
Nigeria’s Inflation Falls Slightly in March; Gold Edges Lower
By Lukman Otunuga, FXTM Research Analyst,
In a favourable development, Nigeria’s inflation has eased to 11.25% in March from 11.31% in February, despite speculation of increased government spending stoking inflationary pressures.
With consumer prices moderating closer towards the Central Bank of Nigeria’s target band of 6%-9%, this may open the doors for the central bank to make a move in the future. While it remains premature to speculate on the possibility of another rate cut occurring anytime soon following the surprise move in March, repeated signs of easing inflationary pressures could prompt the CBN to cut rates again during the second half of 2019.
PBoC to ease on stimulus?
The People’s Bank of China is singing a different tune compared to the dovish tones coming from major central banks around the world. The PBoC released a statement from its April 12 meeting, saying the Chinese economy “has shown healthy development and economic growth is resilient”.
Such rhetoric frames the expectations surrounding Wednesday’s release of China’s Q1 GDP, industrial output, and retail sales data, as the Yuan remains steady against the US Dollar around the 6.71 handle at the time of writing.
However, markets are also interpreting this confident outlook as reason for the PBoC to withhold more stimulus; the PBoC has previously said it would not “flood” the economy with excessive liquidity. With market sentiment perhaps over-reliant on the potential for more stimulus measures, equity markets have indulged in some profit-taking, with the Shanghai Composite Index some 100 points off its highest level since March 2018.
Gold to test $1,280 support level … again
Gold is on course for testing the $1,280 support level yet again, as the resilient US Dollar makes it harder for the precious metal to hang on to gains.
Broadly, global risk sentiment has been supported by China showing signs of stabilizing and hopes that the US-China trade saga will conclude with a breakthrough deal. However, with the ECB and the IMF warning that risks remain tilted to the downside, markets do not yet have the all-clear for charging into a risk-on side. This alone should provide support for Gold prices at the $1280 floor.
Focusing on the medium to longer-term outlook, Gold remains protected by concerns over slowing global growth, Brexit, geopolitical risks and a dovish Federal Reserve. As long as these themes remain present, the metal still has ample upside potential.
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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