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FXTM Comment: Sterling Pressured After Article 50 Date Confirmed

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FXTM Research Analyst Lukman Otunuga comments on the recent reports confirming that Theresa May will be triggering Article 50 on the 29th of March.

Dollar weakness has encouraged bullish investors to elevate the Sterling/Dollar to a fresh three-week high at 1.2436 during Monday’s trading session.

Although the emergence of a lone BoE hawk last week coupled with concerns about rising inflation has provided Sterling a boost, investors should be under no illusion that this has changed the bearish sentiment.

With recent reports confirming that Theresa May will be triggering Article 50 on the 29th of March already sparking jitters, Sterling may be in-store for some serious punishment this week.

It is becoming clear that the Brexit developments are likely to dictate where Sterling trades in the medium to longer term with uncertainty effectively limiting any extreme upside gains. From a technical standpoint, Sterling bears may re-enter the scene back below 1.2300.

Risk Sentiment Dented By Protectionist Fears
Stock markets were under noticeable pressure during Monday’s trading session with risk appetite absent after the G20 decided to drop a pledge to avoid trade protectionism. Asian shares concluded mostly mixed amid the sluggish trading mood while risk aversion exposed European equities to downside losses.

Although Wall Street limped into gains last week, further upside may be limited this evening as the renewed protectionism concerns keep investors on edge.

With major finance leaders from the largest economies in the world failing to persuade the US to renew an anti-protectionism pledge, the growing threat of a potential global trade war may create serious headwinds for this phenomenal stock market rally.

Dollar Index levitates above 100.00
The lingering impacts of last week’s “dovish hike” can still be seen on the Greenback which remains on the back foot as of writing. Although sellers have exploited the disappointment from the Fed’s less than hawkish stance to attack the Dollar Index repeatedly, the downside may be limited as sentiment improves towards the U.S economy.

Investors may pay extra attention to the string of speeches from Fed officials this week which could offer further clarity on interest rate hike timings this year.

A hawkish surprise could install Dollar bullish investors with enough inspiration to send prices back towards 101.00.

From a technical standpoint, the Dollar Index remains heavily pressured on the daily charts. The 100.00 psychological support remains a key level which could protect the bulls or assist the bears.

Commodity spotlight – WTI Oil
WTI Crude found itself vulnerable to heavy losses on Monday with prices sinking towards $48 as the rising drilling activity in the U.S reinforced the oversupply fears. Sentiment remains bearish towards oil and the fading optimism over the effectiveness of OPEC’s supply cut deal could encourage sellers to attack prices further.

Although OPEC’s inability to balance the oil markets in the first half of 2017 has sparked speculations of the organization extending its six-month contract, the rise of U.S shale and lingering concerns of some members not fully following the compliance in cutting production could create headwinds.

From a technical standpoint, WTI Crude is heavily pressured on the daily charts and a break below $48 could open a path lower towards $47.


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E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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E-Financial

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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