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CBN Moves Against Illegal International Fund Transfer

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CBN

The Central Bank of Nigeria on Friday said it observed that some banks are operating accounts either as companies or companies masking themselves as individuals for the purpose of illegally receiving money transfer flows into those accounts for onward disbursements to recipients in Nigeria.

This came on the day the naira sustained its downswing on the parallel market as it fell to a record low of N412 to the dollar, as against the N408 to the dollar it closed the previous day.

To curb this international fund transfer, the CBN in a circular titled: “Illegal International Money Remittances Through the Banking System,” dated August 25, 2016, and signed by its Acting Director, Trade and Exchange Department, Mr. W.D. Gotring, directed banks to identify and freeze such accounts receiving illicit flows with immediate effects.

The banks were also directed to submit the mandate and account details of these accounts held in naira or foreign currency to it for onward reporting to the security agencies.

“The CBN therefore reiterates that deposit money banks have the absolute responsibility to conduct Know Your Customers’ Business (KYCB) checks on all their customers to ensure that they do not transact in illegal/illicit flows,” it added.

Meanwhile, experts have expressed concern that the falling value of the naira coupled with a high inflation rate of 16.5 per cent is making the nation’s currency to lose its function as a store of value.

But on the interbank forex market, the spot rate of the naira rose marginally to N314.95 to the dollar yesterday, higher than the N316.84 to the dollar it closed the previous day.

The strong depreciation of the naira on the parallel forex market was majorly attributed to the strong demand for the greenback by customers of the eight banks that were banned from foreign exchange transactions.
It was gathered that a lot of them now patronise the parallel market for dollar purchases to meet their pressing obligations as they await the resolution of the matter between their financial institutions and the Central Bank of Nigeria (CBN).

The CBN on Tuesday barred nine banks from participating in the forex market for not remitting a total of $2.334 billion Nigerian National Petroleum Corporation (NNPC)/Nigerian Liquefied Natural Gas (NLNG) Company dollar deposits to the federal government’s Treasury Single Account (TSA).

The affected banks were: the United Bank for Africa (UBA) Plc, First Bank of Nigeria (FBN) Ltd, Diamond Bank Plc, Sterling Bank Plc, Skye Bank Plc, Fidelity Bank Plc, Keystone Bank, First City Monument Bank (FCMB) Ltd and Heritage Bank Limited.

But UBA was re-admitted into the forex market by the CBN on Thursday having complied with its directive.

Speaking in a telephone interview with THISDAY yesterday, the Chief Executive Officer of Graeme Blaque Group, Zeal Akaraiwe faulted the restriction of the banks from participating in the forex market, saying the action by the central bank sent a wrong signal to investors.

“There CBN ought to have imposed other punishment. We are having serious forex problem in this country, clients cannot find forex and you are banning banks from the forex market. What I see is that we are trying to sabotage ourselves.

“This would certainly affect investor confidence, especially the foreign investors which we have been pursuing. The financial market works on a lot of confidence and destroying the confidence does not help anybody.”

Akaraiwe expressed concern that the nation’s currency has lost its quality as a store of value, saying a lot of people may be forced to dump the currency for other stronger currencies.

“Of course, it is going to increase the pressure in the forex market. And we cannot do anything about the dollar because we do not have natural control over dollar cash flow. One of the things we are suffering is cash flow problem. That is, we have dollar assets on the ground as oil, we have dollar assets sitting in oil companies, but we don’t have dollar cash and we are not doing anything to fix the problem.

“I keep emphasising that in the financial market, confidence is very important and you must do all to retain that confidence, but not by banning banks from the forex market,” Akaraiwe added.

Also, the chief executive officer of an investment bank who pleaded to remain anonymous expressed concern over the loss of value of the naira.

He urged both the fiscal and monetary authorities to fake urgent steps to correct the structural imbalances in the economy, saying the country’s economic managers must not fold their arms and watch the country go the way of Zimbabwe whose currency has been battered.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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