- Forex Weekly Outlook August 14-18
Currencies of developed nations plunged last week following Donald Trump’s response to North Korean missile threat. Deepening global uncertainties further. However, these uncertainties have increased emerging economies attractiveness, especially haven assets.
The renewed interest in the emerging assets has bolstered the attractiveness of emerging currencies as investors looks to avert volatility ahead of North Korean threats.
This week GBPJPY and CADJPY top my list.
The United Kingdom economy remains subdued as the nation strives to negotiate its way out of the European Union. Since the U.K voted to leave the European Union, the inflation rate has jumped above the Bank of England’s 2 percent target to 2.6 percent year on year, pushing input costs to a 3-month high in July. While consumer spending declined by 0.8 percent year-on-year.
The surge in prices is weighing on new investments, especially with the BOE not kin on hiking rate to support new job creation and growth. Pound sterling remains unattractive and it is expected to get worse as global uncertainty intensifies.
Again, while Japan is pulling up missile shield its assets continued to gain with Japanese yen rising to 8-week high of 108.70 against the US dollar and 7-week high of 141.24 against the pound. Also, the Japanese economy has expanded for a fifth consecutive quarter in the first quarter of 2017. Giving it an edge over other Group-7 economies.
Since this pair called the top at 147.75 five weeks ago, it has lost 651 pips to close below 20-day moving average and 142.42 key support last week. This week, I will be looking to sell this pair below the ascending trending for 139.90 support levels, target 1. A sustained break should open up 129.85, our target 2.
The Canadian economy has expanded substantially since its manufacturing and labour market increased following interest rate hike by the Bank of Canada. However, the uncertainties in the US and the global market continued to hurt Canadian economic outlook. This includes loonie.
The Canadian currency has lost 426 pips in the last three weeks. Indicating that not just the slump in global commodities that is hurting the loonie but also the weakness in the U.S. economy. It’s largest trading partner.
Therefore, this week, I will be looking to sell this pair below 86.36 price levels for 83.11 support levels and expect the continued decline in Canadian dollar and surge in the attractiveness of the Japanese yen to propel the pair towards 80.27, target 2.
Banks CEOs Declare Readiness, Assured No Hidden Charges In Forex Sale
Chief executives of banks have assured no hidden charges in the sale of foreign exchange as they declared their readiness to meet the demands of Forex in the country.
The CEOs under the aegis of the Committee of Chief Executives of Banks at a virtual parley with the media also said they are not interested in procuring bureau de change licenses to dispense the new responsibility thrust on them by the central bank of Nigeria (CBN)
At a media briefing chaired by the chairman, and the managing director of Access Bank, Herbert Wigwe, other CEOs in attendance include Segun Agbaje of GTCO, Yemisi Edun of FCMG amongst others.
The briefing was in reaction to the CBN circular with Ref No: BSD/DIR/PUB/LAB/14/052 which gave a directive to Deposit Money Banks (DMBs) to set up teller points at designated branches and sell Foreign Exchange customers in need.
The directive in the circular signed by Haruna Mustafa, Director, Bank Supervision Department, was a follow up to the stoppage by the CBN, of the sale of forex to the Bureau De Change (BDC) operators in the country.
With this development, banks are now to attend to legitimate FX requests for Personal Travel Allowance, Business Travel Allowance, tuition fees, medical payments and SMEs transactions, among others.
The regulator also disclosed that a toll-free line had been set up at the CBN for bank customers to escalate unresolved complaints related to their FX requests.
Speaking at the media briefing, Herbert Wigwe assured of the readiness of the banks to meet the demands of the customers without any additional costs, noting that they have more capacity than the BDCs
“Banks have broader network than the previous sources and if you look at the branch network of all the banks in the country, I am not sure that the alternatives have resources like banks to provide this service to everybody”.
He allayed the fear of hidden charges said the transaction comes at no additional cost to the customers.
“There is no one-cent additional charge. It is unfortunate that bankers always come under pressure every time because of accusations of hidden charges. There is no additional charge in this service,” he stated.
Segun Agbaje, the group managing director of GTCO, promised that the banks will provide several channels for the customers to get their supply for their needs as he assured of the readiness of the banking system.
“They can start to come from today. We are ready to fund their demands”. stating that different banks have different strategies to ensure there are no hitches.
He stated that the control is centralised in each bank while the service is decentralised so as to be able to cater to many at the same time.
“We will run a transparent system and the compliance will be very strict because there will be sanctions. Anyone that refuses to comply with the rules will be sanctioned by the regulator and the law enforcement agencies” as he warned those that could want to come with fake documentation or passport to beat the process.
In her contribution, Yemisi Edun of FCMB assured that customers will have the same experience across the board irrespective of the bank as she allayed that the services may be poor in some banks.
“We have done this with remittance where we dedicate desks to attend to customers and customers will be directed to the desks once they have proper documentation.
In conclusion, Wigwe stated that apart from the injection that could be coming from the CBN, the banks also have their sources for foreign exchange which include from International Monetary Transfer Organisation, Diaspora remittances, and others from where they can meet the customer’s demands.
“We are putting structure and infrastructure in place to meet the demands of the customers but they should come with proper documentation” Wigwe stated
The apex bank expects the DMBs to adequately publicize the locations of the designated branches and make necessary arrangements to sell FX to customers in cash and/or electronically in compliance with extant regulations,
While CBN said the banks should ensure that no customer was turned back or refused FX provided that documentation and all other requirements are satisfied, it also outlaws undue delays, rationing and/or diversion of FX while it compels DMBs to establish electronic application and alert systems to update customers on the status of their FX requests, the circular added.
BDCs Continues To Provide Forex Services After CBN Halts Sales Of Forex To Operators
The recent announcement by the Central Bank of Nigeria (CBN) suspending dollar sales to Bureau de Change Operators would not stop the forex retailers from conducting their services in line with their operating licenses and guidelines.
According to a statement by the President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, BDCs will continue to provide foreign exchange services to the public.
“BDCs are licensed to provide retail FX services, including buying from the public and also selling to end-users for allowable transactions namely Personal Travel Allowance (PTA), Business Travel Allowance (BTA), payment of medical and school fees,” Gwadabe said.
He added that while the dollar sale from CBN had helped in enhancing supply, the fact remains that BDCs are empowered to source FX from other sources and also to provide various services to members of the public.
“While the CBN has stopped dollar sale to BDCs, it has not canceled their operating licenses, or banned them from providing FX services to members of the public”, he added.
“At ABCON, we urge our members to see the CBN pronouncement as a wake-up call and opportunity to widen their customer base and deepen their business.
“ABCON has always worked with the CBN to ensure proper working of the FX market and in line with this principle, we will engage with the apex bank to address and resolve all the issues that led to the recent action, including identification and sanctioning of earring BDCs, where necessary.
“In addition to this, and in view of the fact that BDCs have been very effective in ensuring stable exchange rate, ABCON will work with relevant stakeholders including law enforcement agencies to develop a National BDC Policy with the aim of enhancing the contribution of the BDC subsector to the nation’s economy”, he said.
Naira Exchange Rates Today, Friday, July 30, 2021
Naira gained N5 against the United States Dollar on Friday morning to N520 at the parallel market popularly known as the black market.
Against the British Pound, the local currency dropped N5 from N710 recorded on Wednesday to N715 on Friday, while against the European it remained at N600, the same rate it traded in the last three days.
The Naira plunged against its global counterparts after the Central bank of Nigeria accused Bureau De Change Operators (BDCs) of illicit money flows and market manipulations that over time have sustained the unregulated black market section of forex.
Operators at the bureau de change section of forex had been accused of being the main source of forex for speculators and hoarders that manipulate forex rates at the unregulated black market, this the CBN plans to curb by cutting its weekly forex supply to BDCs but focus on servicing the economy through the banks.
Naira Black Market Exchange Rates
Morning * Midday** Evening *** Final Rates
Bureau De Change Naira Rates
Central Bank of Nigeria’s Official Naira Rates
|7/28/2021||SOUTH AFRICAN RAND||27.6161||27.6498||27.6836|
N.B: These tables are updated three times a day.
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