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FX Window Records $1.323bn Transactions in One Week



  • FX Window Records $1.323bn Transactions in One Week

Total trade value for the week was a marked improvement, compared to the $803.1 million recorded in the preceding week.

The surge in activities at the window was attributed to offshore investor interest in treasury bills and the primary market auction (PMA) held last week by the Central Bank of Nigeria (CBN), with the rate on the Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) closing at N360.39/$1.

Last April, the CBN introduced the I&E window including a raft of other measures to improve dollar liquidity in the forex market. The central bank has since intervened actively to support the local currency while keeping domestic liquidity conditions tight.

Most activities now occur on the I&E window, with Fitch Ratings recently acknowledging that the rate on the I&E “should now be considered the relevant exchange rate”.

As of August 11, total turnover on the forex window was put at $4 billion and trading volumes and values have continued to rise. In addition, the forex window has helped banks shore up their forex liquidity this year.

Managing Director, Ecobank Nigeria Limited, Mr Charles Kie at the weekend said steps taken by the CBN so far to stabilise the forex market had been positive.

According to Kie, “Nobody wants to come back to a situation whereby Letters of Credit (LCs) cannot be paid because that has an impact on the credibility of any financial institution.”

He said the I & E window has created a platform that makes forex available and makes it easy for the price of the currency to be determined by supply and demand.

“This is positive for the economy. And that has allowed some flows. When the naira finds its right price in the market, there is no way investor flows would not come in.

“And as more investor flows come in, obviously that has an impact on the rate of the naira to the dollar.

“We have seen some improvements and I believe things can further improve. I believe if the economy is properly diversified and sources of forex are diversified, that will definitely allow re-balancing of the economy and improve foreign currency liquidity,” he added.

Meanwhile, as the 12-member CBN Monetary Policy Committee (MPC) meeting commences today, experts have expressed divergent views on the likely outcome of the meeting.

While some expect the MPC to slightly lower interest rates in order to support economic growth, some believe that the committee would keep all the key monetary policy tools unchanged, considering the fragile macroeconomic environment.

After five consecutive quarters of contraction, the Nigerian economy recorded a GDP growth rate of 0.55 per cent in the second quarter (Q2) of 2017 but remains susceptible to exogenous shocks and a high inflationary environment.

At the last meeting of the MPC in July, while the Monetary Policy Rate (MPR) was retained at 14 per cent, the Cash Reserve Requirement (CRR) and liquidity ratio were kept at 22.5 per cent and 30 per cent, respectively.

Inflation, on the other hand, has only slowed to 16.01 per cent in August, with the food component of the Consumer Price Index (CPI) still at an eight-year high, a concern which members of the committee would factor tomorrow and Wednesday when deciding on whether to lower rates or leave them unchanged.

Analysts at Afrinvest West Africa Limited said at the weekend that the MPC members would overwhelmingly vote to retain policy rates at current levels.

They noted that over the last three weeks, rates had been dropping sharply in the treasury bills market in response to the possible near-term easing of monetary policy and a reduction in the supply of longer-dated bills since CBN stopped offering 364-day bills at its OMO auctions.

Afrinvest noted that there has been a bull-flattening pattern (longer-term rates falling faster than shorter ones) at primary and secondary auctions for treasury bills, as investors aggressively position in longer-dated bills.

“Given that market sentiments are often leading indicators of policy rate changes, we expect the MPC to take notice of recent movements in the yield curve.

“We believe MPC would maintain status quo on all rates next week given the need to consolidate gains on stabilising forex and inflation rates,” Afrinvest said.

But Financial Derivatives Company Limited (FDC), in a note at the weekend, stated that the financial and business communities would be waiting with bated breath for the outcome of what the economic and research advisory firm described as one of the most important and symbolic meetings of the committee in recent times.

This, according to the FDC, was because the meeting will be taking place at a time when political and populist considerations would “overshadow the policy and economic imperatives”.

“The most likely outcome is a split decision and a compromise around the maintenance of the status quo with fringe adjustments to the CRR and the width of the asymmetric corridor,” FDC stated.

The Ecobank Nigeria boss, however, noted that high interest rates discourage investment.
“What that means is that clearly, we need to create an environment where investments, which are critical for GDP growth, is made easy and cost-efficient.

“If the cost of production of any good in the country is so high, how do you want inflation to come down?

“So there is a need for the whole macroeconomic environment to ensure that inflation goes down and secondly, that the interest rate also reflects the level where it can create sustainable investments and high returns to the country,” he said.

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.


Banks’ Credit to Economy Hits N19.33 Trillion in August



Godwin Emefile

Deposit Money Banks Credit to Economy Rose to N19.33 Trillion in August

The total credit facility to the economy rose to N19.33 trillion in the month of August.

The Central Bank of Nigeria-led monetary committee disclosed on Tuesday after the nation’s monetary policy committee meeting.

The committee attributed the improvement to the 65 percent loan-to-deposit ratio policy implemented to compel the nation’s deposit money banks to join central bank efforts at growing the real sector of the economy.

Godwin Emefiele, the Governor of the Central Bank of Nigeria, who spoke during the meeting said “The bank’s policy on Loan to Deposit ratio also resulted in a significant growth in credit to various sectors from N15.57tn to N19.33tn between end-May 2019 and end-August 2020, an increase of N3.77tn.

“This growth in credit was mainly to manufacturing (N866.27bn), consumer credit (N527.65bn), oil and gas (N477.65bn), agriculture (N287.11bn) and construction (N270.97bn).”

On monetary aggregates, broad money supply (M3) rose to 6.93 per cent (year-to-date) in August 2020 from 5.23 per cent in July 2020, reflecting the increase in both Net Foreign Assets and Net Domestic Assets.

He said total domestic credit grew by 6.94 percent in August 2020, lower than the 9.43 percent recorded in July 2020.

The committee reduced the nation’s benchmark interest rate by 100 basis points to 11.5 percent, down from the previous 12.5 percent.

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Emerging Cities Take on Established Hubs for Graduates Seeking a Career in Finance




Graduates Seeking a Career in Finance Prefer Dubai to Start Their Career

Dubai is the number one global destination for graduates who successfully complete the flagship graduate programme at one of the world’s largest independent financial advisory organisations.

On passing the intensive scheme, deVere Group routinely asks graduates in which location within the Group’s global network of offices they would like to start their international financial services career. This year, 36% have responded with Dubai.

The second most popular is London (25%); Hong Kong is third (14 %); Mexico City is fourth (13%) and Moscow is fifth (6%).

The remaining 6% is made up of other destinations including Shanghai, Geneva, Paris, and Abu Dhabi.

deVere Group CEO and founder Nigel Green comments: “This survey highlights that the next generation of financial services professionals are open to look beyond the traditional and more established global financial hubs.

“The order of the top destinations changes with each group of grads we take on, but Dubai, London, and Hong Kong are typically in the top five somewhere.

“This is because, quite understandably, these global hubs of finance, commerce and technology represent centres of enormous possibilities for ambitious individuals about to embark on careers as international wealth-advisory and fintech professionals.

“There are some common traits amongst these cities, including that English is commonly spoken, they are politically and economically stable, there is a high level of internationally-minded high net worth individuals, and by relocating to these places one can usually expect comparatively high financial rewards.”

He continues: “What is different this year is that for the first time emerging financial hub cities are making the top five. Mexico City and Moscow are now actively competing for top talent with well-established international financial centres like Shanghai, Geneva and Tokyo.

“All these global destinations are unique and differ from each other in terms of the lifestyle they offer and in terms of clients’ expectations, economic environments and regulatory conditions.

“With each of the top five cities offering unique opportunities and challenges, each one attracts grads who have often quite markedly different strengths and weaknesses, skill sets and aspirations,” notes Mr Green.

“The results of this survey suggest that despite the pandemic, talented young people seeking a rewarding career are keen to look for opportunities internationally.”

The deVere CEO concludes: “With a globally-focused outlook from the wealth advisers and fintech professionals of the future, we can expect this trend of emerging hub cities to take on stalwart destinations to continue for the foreseeable future.”

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Adesina, Godwin Emefiele, Others to Deliver Keynote Address at ASA 2020



Akinwumi Adesina

Adesina and Godwin Emefiele to Deliver Keynote Speech at Agriculture Summit Africa (ASA) 2020

The President of the African Development Bank (AfDB), President Dr. Akinwunmi Adesina, is expected to deliver the keynote address at the 2020 Agriculture Summit Africa (ASA) holding this week.

The yearly summit organised by Sterling Bank is titled ‘Fast forward agriculture: Exploiting the Next Revolution’ this year.

According to the organisers, participants were expected to log in online while a few others would be in Lagos and Abuja studios.

In a statement released on Tuesday, Yemi Odubiyi, the Executive Director of Corporate and Investment Banking, Sterling Bank said other dignitaries were expected to deliver goodwill messages at the summit.

Some of the names mentioned were the governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele; Minister of Agriculture and Rural Development, Alhaji Muhammad Sabo Nanono; Cross River State Governor, Prof. Ben Ayade; his Kebbi counterpart, Senator Atiku Bagudu; and the Oniru of Iru Kingdom, Oba Abdulwasiu Omogbolahan Lawal.

Director, Advocacy and Country Alignment Function (ACAF), Director-General’s Office, International Institute of Tropical Agriculture (IITA), Dr. Kwasi Attah-Krah, is expected to deliver another keynote address on the second day.

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