The people’s Bank of China (PBoC) set the midpoint for yuan against the dollar at 6.4589 on Friday – a 0.6 percent increment that marked the biggest since July 2005, when the fixing was removed. The central bank responded to an overnight fall of the dollar after the Bank of Japan’s decision to keep monetary policy unchanged while waiting to monitor the effects of already implemented negative rate.
The move by PBoC was part of the apex bank’s aim to set the currency reference rate in line with the offshore exchange rate. Prior to the decision, offshore yuan appreciated 0.3 percent on Thursday to 6.4834.
“The offshore yuan’s reaction is muted, so it seems the market was already expecting a much stronger fixing,” said Ken Cheung, a currency strategist at Mizuho Bank Ltd. in Hong Kong. “This is a reaction to the dollar weakness overnight, and there’s not much in the way of policy intention to read into.”
On Friday, the dollar plunged further against the yen reaching 107.57, its lowest since October 2014. The currency also weakened against other currencies, bringing its total decline on the dollar index this week to over 1.5 percent.
“The fixing is no surprise, the expectation for a stronger yuan fix was laid by the gains for the yen after the Bank of Japan announcement yesterday,” said Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong told Bloomberg. “The trade-weighted basket continues to depreciate, albeit at a modest pace. But the key to the lower trade-weighted rate does not really lie with the PBOC, rather it is the dollar weakness against other major currencies which is the main driver.”
On 11th August last year, when the PBoC first devalued its currency by 2 percent that triggered a global sell-off and loss of over $4 trillion from global equities. The central bank said it would allow market forces determine its currency value henceforth, while setting the yuan’s spot rate.
The more reason why the apex bank allows the yuan movement — fall or rise only 2 percent against its daily reference rate to avoid similar volatility.
Illegal Withdrawals: Rep To Investigate NNPC, NLNG Over $1.05bn
Rep To Investigate NNPC, NLNG Over Illegal Withdrawal of $1.05bn from NLNG Account
The Nigerian House of Representatives has concluded plans to investigate illegal withdrawal of $1.05 billion from the account of the Nigerian Liquefied Natural Gas Limited (NLNG) by the Nigerian National Petroleum Corporation (NNPC).
The decision followed the adoption of a motion titled ‘Need to Investigate the Illegal Withdrawals from the NLNG Dividends Account by the Management of NNPC’ moved by the Minority Leader, Ndudi Elumelu, on Tuesday.
The House adopted the motion and mandated its Committee on Public Accounts to “invite the management of the NNPC as well as that of the NLNG, to conduct a thorough investigation on activities that have taken place on the dividends account and report back to the House in four weeks.”
Elumelu said, “The House is aware that the dividends from the NLNG are supposed to be paid into the Consolidated Revenue Funds account of the Federal Government and to be shared amongst the three tiers of government.
“The House is worried that the NNPC, which represents the government of Nigeria on the board of the NLNG, had unilaterally, without the required consultations with states and the mandatory appropriation from the National Assembly, illegally tampered with the funds at the NLNG dividends account to the tune of $1.05bn, thereby violating the nation’s appropriation law.
“The House is disturbed that there was no transparency in this extra-budgetary spending, as only the Group Managing Director and the corporation’s Chief Financial Officer had the knowledge of how the $1.05bn was spent.
“The House is concerned that there are no records showing the audit and recovery of accrued funds from the NLNG by the Office of the Auditor-General of the Federation, hence the need for a thorough investigation of the activities on the NLNG dividends account.”
FG Gives Radio, Tv Stations Debt Relief, Writes Off 60 Percent Debt
FG Reduces Tv, Radio Stations Licence Fee by 30%, Writes Off 60% Debt
The Federal Government has reduced the existing licence fee paid by all open terrestrial radio and television stations by 30 percent.
The Minister of Information and Culture, Lai Mohammed, disclosed this at a press conference in Abuja on Monday.
He said the Federal Government has also decided to write off 60 percent of the N7 billion loan owed the government by television and radio stations.
He explained that the N7 billion is the total outstanding from television and radio stations on the renewal of their operating licences.
Mohammed, however, said for any station to benefit from the 60 percent debt relief, such a station must be ready and willing to pay the remaining 40 percent within the next three months.
According to him, the debt relief offer would open on July 10th and close on the 6th of October.
Mohammed said, “According to the NBC, many Nigerian radio and television stations remain indebted to the Federal Government to the tune of N7bn.
“Also, many of the stations are faced with the reality that their licences will not be renewed, in view of their indebtedness.
“Against this background, the management of the NBC has therefore recommended, and the Federal Government has accepted, the following measures to revamp the broadcast industry and to help reposition it for the challenges of business, post-COVID-19:
“(a) 60 per cent debt forgiveness for all debtor broadcast stations in the country; (b) the criterion for enjoying the debt forgiveness is for debtor stations to pay 40 per cent of their existing debt within the next three months.
“(c) Any station that is unable to pay the balance of 40 per cent indebtedness within the three-month window shall forfeit the opportunity to enjoy the stated debt forgiveness.
“(d) The existing license fee is further discounted by 30 per cent for all open terrestrial radio and television services effective July 10, 2020.
“(e) The debt forgiveness shall apply to functional licensed terrestrial radio and television stations only. (f) The debt forgiveness and discount shall not apply to pay TV service operators in Nigeria.”
Nigeria’s Inflation to Average 12.2 Percent in 2020 Says PwC
PwC Says Inflation Will Average 12.2% in 2020
PricewaterhouseCoopers (PwC) has predicted that the nation’s inflation rate will average 12.2 percent in 2020.
In the report titled ‘Demand and supply shocks from COVID-19 keep inflation higher for longer’, the company based its projection on the rising cost of goods and services due to the supply shocks to commodity and the COVID-19 negative impacts on the economy.
The report explained that the supply disruption brought about by lockdown measures put in place to mitigate COVID-19 spread pushed headline inflation to its highest in 23 months in the month of May 2020.
Nigeria’s headline inflation rose by 12.4 percent year-on-year in the month of May. Its fastest pace of increase in 26 months, according to the National Bureau of Statistics (NBS).
However, PwC said because of the growing global uncertainty due to the projected second wave of COVID-19 and declining household incomes, headline inflation will increase from the average of 11.4 percent recorded in 2019 to average 12.2 percent in 2020.
“Barring a second wave of the pandemic, which could further threaten outlook for global economic growth, coupled with the absence of major shocks to food supply in Nigeria, inflation outlook for rest of the year could be influenced by two factors. Firstly, the elevated base effect, and secondly, waning household incomes. The first factor is likely to have a greater impact.”
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