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Reserve Bank of Australia Sees Faster Growth

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reserve bank of australia

Australia’s central bank maintained its forecast of accelerating growth in response to easy policy, even as risks around key trading partner China cast a shadow over the regional economic outlook.

The Reserve Bank of Australia trimmed its inflation forecast for the year through June 2016 and its 2017 growth projections in a quarterly monetary policy statement Friday but it kept most of its estimates unchanged.

“A further increase in growth in household incomes and demand is anticipated, supported by rising employment, low interest rates and lower” gasoline prices, it said “The outlook for China’s growth is a significant uncertainty for the outlook for the Australian economy.”

Australia is benefiting from a depreciating local dollar that helps insulate the economy from shocks abroad and increases the competitiveness of local industries, whereas jurisdictions like Europe and Japan are struggling with their currencies. Local policy makers kept rates unchanged Tuesday for a ninth month as they gauge the impact of recent financial market turbulence on global and domestic growth.

The Australian dollar fell and was quoted at 71.87 U.S. cents at 11:32 a.m in Sydney after December retail sales were lower than anticipated.

The market upheaval in part reflects “concerns about the evolving balance of risks in China and the ability of the Chinese authorities to manage a challenging economic transition,” the central bank said today. “Any sharp slowing in economic activity or increase in financial stresses in China could spill over to other economies in the region.”

China Devaluation

China devalued its currency in August and then undertook an eight-day stretch of weaker yuan fixings through Jan. 7, roiling global financial markets and fueling concern it was favoring depreciation to revive the slowest growth in a quarter century.

China’s central bank has at the same time been burning through its currency reserves to support the yuan amid record capital outflows.

At the same time, Australia recorded its biggest quarter of employment growth on record at the end of last year and unemployment fell to 5.8 percent, even as the economy was on course to expand at a below-trend pace.

“It is possible that the strength in the labor market data contains information about the economy not apparent in the national accounts data,” the RBA said. “In part, employment growth appears to have reflected the relatively strong growth of output in the more labor-intensive sectors of the economy, such as household services.”

The RBA is trying to orchestrate a transition away from mining investment to other industries in the economy, using low rates and a weaker dollar as a tailwind for industries. In some areas this is working: rising house prices have fueled a residential construction boom and conditions for business are above average. Yet there is still no sign of an uptick in investment outside the mining industry it is seeking.

Unwinding Investment

Resource firms are about half way through the unwinding of investment programs, and reflecting lower global commodity prices, the central bank today lowered its forecast for the terms of trade, or the ratio of export prices to import prices, by about 4 percent compared with its November estimate.

Given inflation is low and the central bank expects little upturn, it reiterated that there may be “scope for easier policy, should that be appropriate to lend support to demand.”

While global central banks are struggling with disinflation or outright deflation that an open economy like Australia’s will be exposed to, one of the curiosities to date is the lack of pass through of higher import prices from a falling currency.

The RBA said today that based on history, the direct effect of the depreciation since early 2013 should add about half a percentage point to underlying inflation over each year of the forecast period. It indicated this time may be a bit different.

Competitive Pressures

“Heightened competitive pressures, including from new entrants into the Australian retail market, and greater efforts by retailers to reduce their costs and improve efficiency, are continued to limit the extent to which higher import prices are evident in final retail prices for some time,” the RBA said.

That’s a boon for consumers. The central bank also said its forecast for better household consumption and income growth — reflecting higher employment and the plunge in gasoline prices – – indicate the nation’s savings ratio is likely to decline less than previously expected.

The RBA said its liaison with retailers “suggests that trading conditions improved in the Christmas and post-Christmas sales period.”

Bloomberg

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Finance

CBN New Policy Boosts Nigeria’s Economy and Increases FX Reserve to Over $40 Billion

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Dr. Olayemi Michael Cardoso

In celebration of one year in office, the Central Bank of Nigeria (CBN), under the leadership of Olayemi Cardoso, has recorded another milestone with an over $40 billion increase in Nigeria’s foreign exchange reserves.

The announcement of the increase was made on Thursday by Cardoso during a symposium in Abuja titled Promoting Stability in an Era of Economic Reforms: The Journey So Far.

It was noted that the increase followed a policy of reform implemented by the administration of Cardoso as the CBN Governor to address Nigeria’s decade-long challenges with declining foreign direct investment and portfolio investments. 

It was gathered that, to further strengthen the nation’s economy, the CBN increased monthly foreign remittances to $1 billion by establishing new operational guidelines for Bureau de Change operators.

“According to Governor Cardoso, the reforms have started to yield positive results, including marked improvements in the FX market and a stabilization of foreign reserves, which have now surpassed the $40 billion mark, the highest in 33 months,” the statement read.

“While noting that inflation remains elevated, he said it is on a downward trend, signaling that the reforms are taking hold in restoring market equilibrium and fostering growth,” the statement added.

Additionally, the CBN had raised the Monetary Policy Rate by 850 basis points to 27.25% and also increased the Cash Reserve Ratio for commercial banks to 50%.

It was gathered that the previous administration had created arbitrage opportunities and discouraged foreign investment. 

In a way to correct these issues, the present administration has streamlined Nigeria’s foreign exchange system and eliminated multiple exchange rates to reduce delays in foreign exchange settlements and prevent revenue losses that had reached 6.2 trillion Naira in 2022. 

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Banking Sector

NDIC Issues Fresh Directives to Unpaid Heritage Bank Customers, List Requirements for Refund

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The Nigeria Deposit Insurance Corporation (NDIC) has issued fresh directives to customers of the defunct Heritage Bank who are yet to receive the refund of their money deposited in the bank.

The managing director of NDIC, Bello Hassan, through the director of communications and public affairs, Nuhu Bashir, issued the fresh directive during the corporation’s ‘special day’ event at the 36th Lagos International Trade Fair.

Urging unpaid customers to come forward, Hassan said that the requirements needed to claim a refund include the customer’s BVN, proof of account ownership, and alternative account details.

He detailed that affected customers can process their claims via the NDIC website, email, and social media platforms.

Highlighting the corporation’s role in liquidating Heritage Bank and facilitating the ongoing recovery and refund of depositors’ funds, Hassan stated, “Depositors who are yet to receive their payment should come forward with their BVN, proof of account ownership, identification, and alternative account details.”

NDIC reaffirmed its commitment to protecting depositors and ensuring financial stability.

“Our mandate is to safeguard depositors and ensure financial stability,” he stated.

Hassan assured customers that banks that are still in operation are safe saying, “All banks with active licenses from the CBN are safe and healthy,” Hassan said.

He pledged the corporation’s commitment to providing a safe and stable financial environment for Nigerians.

According to him, a stable financial environment will boost public confidence in financial institutions and enable businesses to thrive.

He stated, “The NDIC is committed to ensuring a stable financial environment that safeguards depositors and builds public confidence, enabling businesses to thrive and contribute to our nation’s economic development.”

Gabriel Idahosa, the president of the Lagos Chamber of Commerce and Industry (LCCI) praised the NDIC for its vigilant monitoring of banks and its proactive intervention in distressed institutions.

Idahosa said, “The corporation’s vigilant monitoring of banks, proactive intervention in distressed institutions, and ongoing commitment to depositor protection have instilled confidence in the banking sector.

“These ensure that banks can continue to serve businesses and individuals even in uncertain economic times.

“Its unwavering commitment to depositor protection and financial stability has been vital in navigating recent economic challenges and safeguarding the integrity of Nigeria’s banks.”

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Banking Sector

Zenith Bank Commends Customers After Successfully Unveiling Upgraded Enhanced Tech infrastructure

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Zenith Bank - Investors King

Zenith Bank Plc has announced that it now boasts the best technology infrastructure in the banking industry, positioning itself to provide an exceptional customer experience and superior service delivery moving forward. This upgrade follows a recent comprehensive technology enhancement.

The bank expressed its heartfelt gratitude to customers for their support and patience throughout the upgrade process, while also extending apologies for any inconveniences experienced during this time.

This announcement was made in a social media post on Wednesday, signed by Dame Dr. Adaora Umeoji, OON, the Group Managing Director/CEO.

In her message, the GMD/CEO emphasized the bank’s commitment to delivering an unparalleled service experience, stating, “We undertook this upgrade to ensure we can offer our customers the best possible service.”

Umeoji pledged that Zenith Bank will continue to innovate, ensuring that customer needs are met swiftly, safely, and conveniently.

The post read in part: “On behalf of the Board, Management, and Staff of Zenith Bank PLC, I would like to thank you for your patience and support during our IT infrastructure migration to a new and more robust operating system.

“We are truly grateful for the trust and confidence you have placed in us. The primary reason for undertaking this extensive endeavor was to better position Zenith Bank PLC for improved service delivery to all our valued customers and to create memorable banking experiences at all our touchpoints.

“While I regret the inconveniences and challenges you faced during and immediately after our migration, I am pleased to inform you that Zenith Bank PLC now has the best technology infrastructure in the industry. We are committed to ensuring you experience superior service delivery going forward.

“Rest assured, you remain our top priority, and Zenith Bank will continue to innovate and offer value-added products and services to meet all your banking needs quickly, safely, and conveniently.”

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