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Tokyo Stocks Surge Ahead of Fed Rates Hike

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  • Tokyo Stocks Surge Ahead of Fed Rates Hike

Tokyo stocks rose on Monday morning, led by exporters as the dollar jumped against the yen ahead of an expected US interest rate hike this week.

Investors are widely anticipating that the US Federal Reserve will raise its benchmark interest rate for only the second time in a decade.

With Japanese borrowing costs still low, including some in negative territory, the yen stands to lose further ground against the dollar as rates rise in the US, making its assets more attractive for investors.

The greenback was at 115.26 yen early Monday — around levels not seen since February — compared with 115.29 yen in New York, and well up from the 114.41 yen in Asia earlier Friday.

“The yen weakness, and dollar strength, on the back of rising US interest rates will lift expectations to another level for better earnings from exporters, starting with the automakers,” said Shinichi Yamamoto, a senior strategist at Okasan Securities Co.

“A wide range of industry groups will be bought including financial stocks that could hope for recovery in profits, as market interest rates rise,” he told Bloomberg News.

Tokyo’s benchmark Nikkei 225 index added 0.77 percent, or 146.45 points, to 19,142.82 by the break.

The broader Topix index of all first-section issues was up 0.20 percent, or 3.07 points, at 1,528.43.

Nissan climbed 1.70 percent to 1,134 yen and Honda was up 0.37 percent at 3,486 yen, while market heavyweight Fast Retailing gained 1.17 percent to 43,090.0 yen by the break.

Energy stocks also rose on a weekend deal by Russia and 10 other non-OPEC states to cut oil output.

The deal followed the November 30 accord of the OPEC cartel, as they attempt to end a global glut that has hammered prices for two years.

Japan Petroleum jumped 4.91 percent to 2,926 yen and Inpex rose 0.48 percent to 1,254 yen.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, 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

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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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South African Rand - Investors King

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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