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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.

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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Oil Rises to $43.76 Despite Falling Oil Demand

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Oil price

Brent Crude Rises to $43.76 Per Barrel on Friday

Oil price extended its gain on Friday despite OPEC and other experts predicting a further decline in demand for the commodity.

The Brent crude oil, against which Nigerian oil is priced, rose from $39.44 per barrel on Tuesday to $43.76 per barrel on Friday before pulling back to $43.42 per barrel.

The oil surged after reports showed that US oil producers were shutting down due to hurricanes and also that crude oil inventories dropped by over 9 million barrels in the week ended September 11, 2020.

The commodity started its bullish run a day after OPEC lowered its demand outlook for the year through the first half of 2021, saying recovery without COVID-19 remained slow.

“Once again, OPEC+ meets against a worrying backdrop of soft global oil prices and an uncertain demand outlook,” Cailin Birch from The Economist Intelligence Unit told CNBC via email on Thursday.

“We maintain our view that Brent crude prices will average just over $42 a barrel in 2020, assuming that OPEC+ partners reconfirm their commitment to output cuts at their September meeting,” Birch said.

Another expert, Tim Bray, a senior portfolio manager at GuideStone Capital Management, through an email said “I do not believe we should expect any material change of course out of the OPEC meeting this week when they review market fundamentals, in part because compliance with previously agreed production cuts has been high,” Tim Bray, senior portfolio manager at GuideStone Capital Management, told CNBC via email.

“It might set the stage for action at future meetings, however,” Bray said.

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Coronavirus: European Investment Bank (EIB) Approves € 12.6bn Financing for Transport, Clean Energy, Urban Development and COVID-19 Resilience

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Outgoing President of the European Central Bank, Mario Draghi and incoming Christine Lagarde.

€ 3.1 billion for COVID-19 public health and business financing; € 3.5 billion for private sector investment and working capital schemes; € 3 billon for clean energy and energy efficiency investment around the world; € 2 billion for Naples-Bari high speed train link largest loan in EIB history.

The European Investment Bank (EIB) today approved € 12.6 billion of new financing for projects across Europe and around the world.

New financing agreed today includes more than € 3.1 billion of COVID-19-related investment to improve public health, strengthen public services and back investment by companies in sectors hit by the pandemic.

Since the start of the COVID-19 crisis, the EIB has approved € 20.1 billion to enable public and private partners around the world to better tackle health, social and economic challenges.

The EIB Board, meeting by video conference, also backed investment in agriculture, water, housing, telecommunications and urban development across Europe, as well as in Africa, Asia and Latin America.

“Fighting climate change and tackling the COVID-19 pandemic must go hand in hand to achieve a green recovery. The EU Bank is working around the world to help mitigate the impact of the pandemic on lives, jobs and businesses; and to ensure that investment focuses on sustainability, innovation, and on reducing the devastating impact of climate change. The 12.6 billion Euros of new EIB financing approved today show how we are working with thousands of local partners to make a long-term difference to people’s lives during these challenging times”, said Werner Hoyer, President of the European Investment Bank.

Largest ever EIB loan to transform travel in southern Italy

Passengers travelling between Rome, Naples and Bari will from 2027 benefit from reduced journey times, a quicker and environmentally friendly alternative to car transport, and improved connections thanks to the largest loan the EIB ever approved.

The EIB board gave the green light for a EUR 2 billion loan to support the construction of the new high-speed train link that will cut journey times by 1 hour and forty minutes between Naples and Bari. More than 2000 jobs will be created during construction and 200 once construction of the high speed line across a European cohesion region is complete.

The new green transport link, part of the Italian government’s “Unlock Italy” decree, will increase the competitiveness of raid transport, reduce carbon emissions and support social and economic development in southern Italy. It is part of the Scandinavia-Mediterranean Trans-European Network (TEN).

€ 3.6 billion to help businesses to better withstand COVID-19 challenges

Ensuring that entrepreneurs and employers can continue to invest and adapt to new challenges posed by COVID-19 is crucial.

Companies in the Baltics, Benelux, Cyprus, France, Italy, Spain, Ukraine, Moldova and Georgia as well as East Africa, Morocco, the Middle East and the Pacific will benefit from new targeted COVID-19 financing initiatives approved by the EIB today.

The new schemes, managed by local financial partners and banking intermediaries, will help reduce economic shocks, unlock new investment and enable targeted financing for sectors most vulnerable to COVID-19 uncertainties.

€ 3 billion for renewable energy and energy transition

Today’s board meeting agreed to support energy investment that will reduce energy use and increase generation of clean energy across Europe and around the world.

€ 1.6 billion will be used to finance small-scale local climate action projects in France, Italy and across the EU, managed by experienced financing partners.

Financing to support construction of new windfarms off the Dutch coast and in Bosnia, improve energy efficiency in Austria and Ukraine, renovate hydropower in Georgia, roll out smart meters in Lithuania and modernise electricity networks in Madeira and Hungary was also approved.

Millions of people across Africa and Latin America will be able to access reliable clean energy for the first time following EIB support for new off-grid solar schemes and energy transition.

€ 2.9 billion to improve urban and national sustainable transport

Rail transport in Italy is set to be transformed by EIB backed investment to upgrade rolling stock on the national network, alongside today’s approval of EUR 2 billion financing for the new high-speed line between Naples and Bari.

The EIB Board also agreed to support new investment to upgrade public transport in Sarajevo and Krakow, and to help improve a key motorway link in Bosnia and Herzegovina.

Improving urban development and social housing

Thousands of families will benefit from new large-scale social housing investment across France and in Germany under new financing programs approved today.

The EIB Board also agreed to support the New Slussen urban development project that will transform of the heart of the Swedish capital Stockholm.

Hospital patients will benefit from EIB support for construction of a new regional hospital in Tournai and approval of a national scheme to improve mental health facilities across Belgium.

A new scheme to support long-term healthcare investment in French regions underserved by medical services was also agreed.

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Crude Oil Rises Despite Demand Concerns as Hurricane Sally Disrupts Further Production

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Oil

Oil Prices Surge as Hurricane Sally Disrupts Oil Production

Oil prices rose on Wednesday despite weak demand after strong hurricane sally threatens to disrupted operations of US oil producers amid a big drop in oil inventories.

Brent crude oil, against which Nigerian crude oil is measured, rose from $39.34 barrel on Tuesday to $41.58 per barrel on Wednesday.

Accordingly, the US West Texas Intermediate crude oil gained 1.8 percent to $38.96 per barrel.

American Petroleum Institute (API), a weekly oil projection report, on Tuesday reported that US crude oil inventories declined by 9.5 million barrels in the week ended September 11, 2020. This, experts at ING Research said if close to the real number due later today, could provide support for global oil prices.

The experts said, “If we see a number similar to the drawdown the API reported overnight, it would likely provide some immediate support to the market.”

This coupled with the fact that with reports that 25 percent of US offshore oil and gas output was halted and export ports were shut as the storm crawled offshore along the US Gulf Coast bolstered oil prices on Wednesday.

Oil prices gained despite OPEC lowering demand for the year, saying weak global recovery amid rising cases of COVID-19 will impact demand for the commodity through the first half of 2021.

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