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Yen Will Rise to 90, Says Sakakibara




Japan’s former top currency official Eisuke Sakakibara says the the nation’s central bank stimulus is nearing its limit, and the yen will gradually strengthen toward 90 per dollar next year.

Japan’s currency gained the most since July last week, touching 100.10 on Thursday, the day after the Bank of Japan shifted policy toward targeting the shape of the sovereign yield curve instead of money-supply expansion, while leaving the negative deposit rate and scale of asset purchases unchanged. The yen could break 100 “at any time,” and may “immediately” strengthen as far as 95, according to Sakakibara, who was dubbed “Mr. Yen” for his ability to influence the exchange rate while a senior Ministry of Finance bureaucrat in the 1990s.

“The yen would probably have a slow appreciation, so that I would not be surprised to see dollar at 90 yen at the end of next year,” the 75-year-old, who is now a professor at Aoyama Gakuin University, said in an interview Monday. “At the very least, monetary easing is getting exhausted. They’ve been doing it for a long time. The effect is getting weaker and weaker.”

With its latest stimulus tweaks, Japan’s central bank has effectively positioned itself for the long haul, also scrapping a two-year time frame for achieving 2 percent inflation. After Governor Haruhiko Kuroda started quantitative-and-qualitative easing in April 2013, the yen depreciated as much as 26 percent versus the dollar to a 13-year low of 125.86 in June 2015. With the BOJ now cornering 36 percent of the Japanese government bond market, doubts have grown about the sustainability of the program. The surprise introduction of a negative-rate policy in January of this year only weakened the yen for one day.

Sakakibara says it’s unlikely the central bank will aggressively ease monetary conditions further. While a deepening of the negative deposit rate “is not unthinkable,” the probability is low because the policy has not been well received by financial institutions or the general public, he said.

Kuroda reiterated Monday there is no limit to monetary policy, and said talk of limits is not helpful at all.

The yen was at 100.93 per dollar as of 3:48 p.m. in Tokyo. It surged to as high as 99.02 on June 24, in the immediate aftermath of the U.K. referendum decision to leave the European Union. It is the best-performing developed-market currency in 2016 with a 19 percent appreciation versus the dollar.

Sakakibara accurately predicted the currency’s advance this year from near 120 per dollar to beyond 100 for the first time since 2013, defying the consensus among analysts at the start of the year for it to fall to 124. The median estimate remains that the yen will end the year weaker at 104 per dollar.

Strength in the yen has been exacerbated by the Federal Reserve’s decision to refrain from raising rates so far in 2016. Futures signal 55 percent odds of tighter policy by the end of this year.

Given the diverging outlook for monetary policy between the U.S. and Japan, some appreciation of the yen against the dollar “is only natural,” according to Sakakibara. However an exchange rate of 95-100 would be all right for the Japanese economy.

“This level of yen strength is not a crisis,” he said. “If it breaks 90 and hits 80, then I would start to consult with the U.S. for joint intervention.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.

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CBN Raises Customs Forex from N381/US$1 to N404.97/US$



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The Central Bank of Nigeria has raised the Naira exchange rate for cargo clearance from N381/US$1 to N404.97/US$1.

This was confirmed by Uche Ejesieme, the Public Relations Officer (PRO), Tin Can Island Customs Command.

The PRO explained that it was not the customs job description to raise the foreign exchange rate but that of the central bank.

The N24 difference has been implemented on the customs system managed by Web Fontaine.

Commenting on the situation, Kayode Farinto, the Vice President of the Association of Nigerian Licensed Customs Agents, said the increase would further escalate inflation on import goods and hurt consumers’ buying power given the present economic situation.

An importer, Gboyega Adebari, who was shocked at the decision said stakeholders will be greatly affected by the decision.

According to him, “When we went to assess a job this morning, we were told that the exchange rate has been increased, though we have been expecting it, but we don’t expect that it would be so sudden. The implication of this on cargo clearance is that cost of clearance would increase by N24 difference.

“The cargoes that already enroute Nigeria would also be affected, the jobs that we want to clear this morning were affected.

“When you go back to the importer and request for money, they will tell you there is no notification of increase from customs, so the freight forwarders are the ones that would bear the additional cost.”

Naira plunged to N502 against the United States Dollar at the parallel market on Wednesday and traded at N715 to a British Pound and N605 against the European common currency, Euro.

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Naira Hits N502 Against U.S Dollar at the Black Market



Naira - Investors King

Persistent dollar scarcity amid devaluation and economic uncertainties plunged the Nigerian Naira to N502 per U.S Dollar at the parallel market, popularly known as the black market.

The local currency traded at N715 to a British Pound and N605 to a Euro on Wednesday morning.

At the Nigerian Autonomous Foreign Exchange Rate Fixing Methodology (NAFEX), the Naira opened at N411.15 to a United States Dollar before dropping to as low as N421.96 and eventually closing at N411.5.

The Central Bank of Nigeria had adopted the NAFEX rate as the nation’s official rate when it became clear that the apex can no long sustain Naira’s fixed-rate amid dwindling foreign reserves and weak revenue generation.

The NAFEX rate, popularly known as the Investors and Exporters Forex Window, was quoted as N410.15 to a United States Dollar on Tuesday, June 8, 2021 on the central bank’s official website.

The apex bank decision to devalue the Naira despite the ongoing economic challenges in Africa’s largest economy was because of the pressure from the World Bank and the International Monetary Fund, demanding the federal government to allow forces of demand and supply to determine the naira exchange rate against pegged Naira-USD rate.

However, with the Federal Government looking for approval from the two multilateral institutions for fresh loans, it became necessary to enforce those demands before new loan applications could be approved.

The World Bank raised Nigeria’s growth rate from 1.1 percent to 1.8 percent in 2021, saying a series of structural reforms and market-determined exchange rates will help boost economic activities.

Also, oil prices were projected to remain high in the near term.

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South African Reserve Bank Imposes Administrative Sanctions on Authorised Dealer in Foreign Exchange with Limited Authority



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The South African Reserve Bank (SARB) has imposed administrative sanctions on Master Currency (Pty) Limited, an Authorised Dealer in foreign exchange with limited authority (ADLA).

Authorised Dealers in foreign exchange (commercial banks) and ADLAs are persons authorised by the SARB to deal in foreign exchange transactions and are regulated accordingly. ADLAs include bureaux de change and are authorised to deal only in certain limited, designated foreign exchange transactions, including travel-related transactions.

The Financial Intelligence Centre Act 38 of 2001 (FIC Act) mandates the SARB to ensure that ADLAs have adequate controls in place to combat acts of money laundering and the financing of terrorism. Flowing from these responsibilities, the SARB inspects ADLAs to assess whether they  have  appropriate measures in place,as required by the FIC Act.

The administrative sanctions were imposed after the SARB conducted inspections at Master Currency (Pty) Limited, in terms of the FIC Act. The inspections found weaknesses in the control measures the ADLA, Master Currency (Pty) Limited, had in place to control anti-money laundering and combating the financing of terrorism.

It should be noted that the administrative sanctions were imposed because of certain weaknesses that were detected in the ADLA’s control measures which inhibited the ADLA from proactively detecting financial crime, and not because it was found to have facilitated transactions involving money laundering or the financing of terrorism.

The administrative sanctions imposed are as follows:

  • a financial penalty of R100 000 in terms of section 45C(3)(e) of the FIC Act, for failing to provide ongoing training to employees to comply with the provisions of such Act in terms of section 43 thereof; and
  •  a directive in terms of section 45C(3)(c) of the FIC Act, to provide the requisite refresher training at all branches, and to submit confirmation and evidence that such training has been conducted and will continue to be conducted on an annual basis.

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