The pound looks set to extend its decline next week, when traders and economists predict the Bank of England will cut interest rates for the first time in more than seven years.
Sterling, which posted its third consecutive monthly drop against the dollar in July, has weakened versus all of its 31 major peers in the past three months. Britain’s vote in June to leave the European Union, along with recent economic data which underscored the ensuing setback to consumer confidence and business activity, have boosted speculation that the BOE will loosen monetary policy on Aug. 4.
All but two of the 46 economists in a Bloomberg survey forecast policy makers led by Governor Mark Carney will cut the key interest rate from a record-low 0.5 percent. While the median estimate in a separate survey was for the BOE to maintain its asset-purchase target at 375 billion pounds ($498 billion), the highest forecast of 525 billion pounds underlined the uncertainty over the extent of the BOE’s stimulus measures. The central bank will also release its quarterly Inflation Report.
“I think it’s a done deal that we’re going to get easing next week, but the question is just how aggressive,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “If we get a package of measures and not just a rate cut it will reinforce the weakening trend for the pound.”
The pound slid 0.3 percent this month to $1.3272 as of 5 p.m. London time Friday, having tumbled almost 9 percent in the previous two months. It dropped to a 31-year low of $1.2798 on July 6. Sterling weakened for a second month versus the euro, losing 0.9 percent to 84.16 pence.
Hardman said the U.K. currency was likely to end the year at $1.24, a level last seen in 1985.
BOE Monetary Policy Committee member Martin Weale shifted from his usually hawkish stance this week and supported immediate stimulus, boosting speculation the central bank will ease policy. Swaps signaled a 100 percent chance of a rate cut next week.
With such odds priced in, there is a risk policy measures fall short of what markets are predicting. The BOE voted 8-1 to refrain from any action this month, which prompted the pound to rally to its highest level in two weeks against the dollar.
‘Shock and Awe’
With traders bracing for the BOE to ease policy next week, Hardman said “it is a higher hurdle for them to out-dove current market expectations” and that could “help to potentially dampen the negative pound reaction.”
Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London, said the BOE may need to do more than the market is predicting to impact heavily on the currency.
“To be more bearish than what is factored, I would suggest a 40 basis-point cut and 50 billion pounds further on the QE front,” Jones said. “That would take it to beyond expectations and should provide a bit of an element of shock and awe. That would probably be the upper limits of what we could expect in terms of further measures.”
CBN Will Redesign Naira Notes Every Five to Eight Years; Say Emefiele
The central bank will henceforth redesign the nation’s legal tender every five to eight years
Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has said the bank will henceforth redesign the nation’s legal tender every five to eight years.
The apex bank governor revealed at the unveiling of the new naira notes on Tuesday.
Godwin Emefiele explained that the naira redesign is in line with global best practice noting that the naira needed to be redesigned and re-issued every five to eight years.
According to the CBN governor, previous administrations lacked the political will to approve the redesign of the naira notes. Stating that it is regrettable that the naira has not been redesigned for the past 19 years.
“In the past, I have to confess that attempts by the CBN to redesign and re-issue the naira notes have been resisted. It is only President Muhammadu Buhari that has exhibited the courage to do so,” the CBN governor stated.
Emefiele added that going forward, naira notes will be redesigned at intervals to address some peculiar issues.
“After today, the CBN will begin to redesign and reissue the naira every five to eight years,” he said.
Investors King had earlier reported that President Muhammadu Buhari unveiled the redesigned naira notes at the Federal Executive Council (FEC) meeting today.
Among those who joined the president with the unveiling include the CBN governor and the EFCC chairman.
Recall, in October, the CBN announced it will redesign the N200, N500 and N1,000 notes in line with its mandate.
Meanwhile, the CBN governor has disclosed that the new naira notes can not be counterfeited because of the features embedded in them.
Similarly, he added that security agencies would be monitoring people making withdrawals at the counter to sniff out money laundering and unravel illegal usage.
“The CBN has moved to a cashless economy. We will restrain the volume of cash someone will withdraw over the counter. We will follow up with the person’s data to know the reason for such withdrawal,” he concluded.
President Buhari Unveils New Redesigned Naira Notes, See Pictures
Buhari launched the new naira notes as the CBN forges ahead with redesign plans.
President Muhammadu Buhari on Wednesday unveiled the new redesigned Naira notes at the State House in Abuja following a series of sensitisation to ensure that Nigerians are aware of the deadline for the old notes.
Godwin Emefiele, the governor of the Central Bank of Nigeria, who was also present at the launching explained that the redesigned notes would help curb counterfeit, reduce hoarding and support the apex bank’s cashless policy.
Earlier in October, the central bank announced it was redesigning the N200, N500 and N1,000 notes in line with its mandate. The apex bank further stated that the newly redesigned notes would be available on December 15, 2022.
However, Emefiele later announced the central bank won’t wait until December 15th before unveiling the new notes on November 2023.
He said, “100 days is enough for any person from any part of Nigeria to deposit his money in the bank and get his money when the new notes are released.
“For information, indeed, we are no longer waiting till December 15th to unveil and begin to release the new notes.
“By the special grace of God, tomorrow, which is the 23rd of November 2022, the President has graciously accepted to unveil the new currencies and the new currencies will be unveiled tomorrow at the Federal Executive Chamber by 10am.”
Meanwhile, the central bank-led monetary policy committee raised interest rates by another 100 basis points from 15.5% to 16.5%. Bringing the total increase in 2022 to 500 basis points despite the challenges Nigerians are facing amid weak job creation and poor earnings.
The committee claimed the decision was based on the rising inflation rate that rose to 21.09% in October. However, given Nigeria’s economic structure and current situation, the persistent increase was mainly to lure foreign investors to invest in the economy against the developed economies that are equally raising rates to curb escalating inflation.
President Buhari to Launch New Naira Notes Today
CBN says Buhari is expected to introduce redesigned naira notes to the public today at the Federal Executive Council (FEC) meeting in Abuja.
Nigerian President, Muhammadu Buhari is expected to launch the redesigned naira notes today at the Federal Executive Council (FEC) meeting in Abuja.
The launch will precede the circulation of the affected currency which is billed for December 15, 2022. The FEC meeting is a weekly (Wednesday) meeting of the executive arm of government often presided over by the President or the Vice President.
The Central Bank Governor, Godwin Emefiele disclosed on the sidelines of the Monetary Policy Committee (MPC) meeting held in Abuja on Tuesday, that the new naira notes will be displayed for public view on Wednesday.
Therefore, the governor added that the CBN will not shift its deadline for all old notes to be returned to commercial banks in exchange for newly designed ones.
Investors King recalls that in October 2022, the central bank announced it will issue redesigned N200, N500, and N1,000 notes, effective December 15, 2022, while the new and existing currencies will remain legal tender and circulate together until January 31, 2023.
However, in a sudden change of schedule, the CBN governor noted that the unveiling will be done by the president today stating that the bank will no longer wait till December 15th to unveil and begin to release the new notes.
” By the special grace of God, tomorrow, (today) which is the 23rd of November 2022, the President has graciously accepted to unveil the new currencies and the new currencies will be unveiled tomorrow at the Federal Executive Chamber by 10am.” Emefiele started.
Meanwhile, the Monetary Policy Committee (MPC) which is the highest decision-making body for any issues related to Nigerian monetary policy has hiked the interest rates from 15.5 percent to 16.5 percent.
According to CBN, the hike in interest rate is to curtain inflation and maintain economic stability.
Speaking at the end of a two-day Monetary Policy Committee meeting yesterday, the CBN governor noted that the MPC voted to retain the cash reserve ratio at 32.5 percent and the liquidity ratio at 30 percent.
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