E-Financial
FXTM: Politics Retake Centre Stage in Capital Markets
FXTM Chief Market Strategist Hussein Sayed comments on the markets in light of political tensions in the Middle East and the impending UK general election.
Asian stocks followed Wall Street lower on Tuesday as the safe-haven Yen and gold strengthened after a disappointing start to the week.
Apparently, it’s geopolitical risks leading the direction. While market participants were focused on the UK general election and former FBI head James Comey’s testimony on Thursday, Qatar hit the headlines on Mondayafter tensions between the country and its neighboring nations escalated.
The surprise decision led by Saudi Arabia to cut ties with Qatar left many investors puzzled on how this outcome may impact oil prices.
The initial reaction on Monday sent Brent futures 1.6% higher, but gains were reversed later in the session as investors realized that the political tensions would not lead to production outages.
With Qatar’s crude production capacity of approximately 650,000 barrels per day, even output disruptions would not have a significant impact on prices. I also don’t believe Qatar’s LNG exports will be affected, despite Saudi Arabian and UAE waters being restricted.
Continued rising tensions might risk OPEC’s oil production agreement, and if Qatar decided not to follow the agreed production quota, other nations could follow, resulting in a failure of the quota policy deal. However, I think this scenario remains unlikely.
In currency markets, the dollar fell to lowest levels in six weeks against the Yen. This shouldn’t be surprising given the scale of event risks this Thursday, specifically UK’s general election and former FBI director James Comey testifying before the US Senate intelligence committee about potential Russian interference in 2016’s US election.
The pound managed to remain bid, despite the weaker than expected PMI data and conflicting poll outcomes.
The latest polls indicate that the Labour party continues to narrow the gap on the Conservatives. YouGov showed a Tory lead of just four points as opposed to ICM which indicated an eleven-point lead.
Whether Britons were seriously swayed in the aftermath of Saturday’s attack will be known on Thursday, but I think if the Conservatives manage to increase their lead it could potentially send GBPUSD above 1.3.
E-Financial
Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme
“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.
E-Financial
CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering
Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.
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.
E-Financial
CBN Urges Banks to Expedite Action on Recapitalisation
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.
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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