E-Financial
FXTM Hints on Emerging Currency Outlook 2016
The year that was 2015 saw emerging currencies challenged by a resurgent USD powering up alongside the US economic recovery, which added to the challenges faced by commodity-linked emerging economies amid a global slowdown in Oil and Gold prices and additional concerns over how a slowing down China economy would impact the general sentiment towards the emerging markets.
The results were a clear downward trend for emerging currencies and we continued to highlight emerging market currency weakness as a global phenomenon throughout 2015.
The emerging market currencies which were the most heavily crushed during the year were those that belonged to economies dependent on commodity exports, therefore the Indonesian Rupiah, Malaysia Ringgit and Nigerian Naira fell victim to this.
The USDIDR plunged from 12428 in January to 14733 at the end of the year, while the Malaysian Ringgit exploded into astonishing weakness and the USDMYR sky-rocketed from 3.4950 to 4.4580 by the end of the year.
The Nigerian Naira appeared vulnerable to extreme losses as 2015 commenced, but a controversial move to ban USD deposits likely prevented further currency weakness and at least improved domestic demand for the Nigerian currency.
Another huge contributor behind the losses in the emerging market currencies globally were the intense concerns surrounding the China economy entering a deep slowdown.
From the second half of 2015 we pointed out that a slowing down China economy was not a problem for China itself, but for all those economies reliant on trade with China and this helped the weakness in the emerging markets accelerate as 2015 drew to a close.
From a domestic standpoint, the China economy is still performing and from recent data we can see that there is no hesitance from consumers to spend in retail, and I still believe that citizens living in China will only become concerned by economic weakness if it begins to hurt employment prospects.
The major bright spot for China in 2015 was the Yuan being added to the prestigious SDR basket from the IMF, which underpins how critical China has become to the global economy regardless of its own reduced GDP growth.
Despite the SDR introduction for the Yuan, the trend for the China currency will remain weak throughout 2016.
The SDR introduction is positive for understanding the longer-term prospects for China within the global economy, but it does not prevent the domestic economy from continuing to experience reduced growth in the short to mid-term.
The People’s Bank of China (PBoC) will continue to take measures to improve economic fortunes for China, which we believe will include a gradual further depreciation of the Chinese currency.
This is a strategic move from the PBoC, with the aim of enhancing export competiveness and encouraging consumers to stop looking for products abroad and to instead consume domestically.
If however consumers still chose to import from overseas they will incur higher import costs which will improve another area of concern for the China economy, slowing inflation.
The only emerging market currencies that did not suffer steep losses in 2015 were those that were pegged to the USD, which became very supportive towards the UAE Dirham (AED).
Local equity markets have suffered due to depressed commodity prices as expected, however the losses were not as intense as they could have been due to the USD peg.
While the local economy will encounter lower growth with dramatically lower commodity prices, investors can use the benefits of the USD peg to consume products from abroad, such as with the Euro and Pound, to boost overseas consumption.
As we look towards 2016, the major turning point for all the emerging currencies will in some ways be in response to higher interest rates from the United States, but in my view it will be how they respond to a new environment of reduced economic growth which will be important.
While it is largely true that the reasons behind the huge falls in the emerging market currencies were due to external factors, 2016 could see these external factors transform into internal and domestic pressures such as reduced spending power and reduced budgets that might lead to jobs being lost.
The continued depression in the commodity markets is also going to limit any potential for a recovery in fortunes.
Slowing growth will continue to occur in China and will likely be a threat to India, although it is very possible that the proactive easing of monetary policy from the Reserve Bank of India might encourage borrowing domestically and help drive growth.
It is worth remembering that the central banks in China and India have been actively intervening to shore up their own economies through monetary easing and there will be some hope that this could help drive industry growth and that as commodity importers, the lower import costs should help create budget for investment elsewhere.
As long as the USD strength and commodity price weakness persists, emerging currencies will continue to experience downward pressures into the first quarter of 2016.
Another factor in play is a further increase in the US interest rates, which would likely lead to even more downward pressures on the Chinese Yuan, Nigerian Naira, Malaysian Ringgit, Indian Rupee and Indonesian Rupiah.
I do believe that as the emerging economies begin to encounter their own reduced domestic growth that this could weigh on outflows and threaten demand for their currencies even further.
Any black swan events in emerging economies or increased geo-political tensions in 2016 will also be more than enough to create uncertainties in the markets and this will impact both the emerging and Asian currencies.
The current threat of a possible black swan event would be removing the peg from the Saudi Arabian Riyal, which would create huge uncertainties throughout the GCC and Middle-East markets.
It would also further weaken the outlook for oil prices because market participants would see the move as the Saudi government choosing to devalue its currency rather than cut oil production.
However, it is important to stress that we do not expect such a move as of yet and this is more of a risk that investors could choose to monitor in case it impacts their investment portfolio.
Jameel Ahmad is the Chief Market Analyst at FXTM
Access Holdings Plc has received the approval of its shareholders to raise additional capital of up to N40 billion or such other amount or their equivalent in foreign currencies, via private placement.
The shareholders gave the approval as part of the special resolutions at Access Holdings Plc Extraordinary General Meeting (EGM) held on Thursday December 18.
In a notice to the Nigerian Exchange Limited (NGX), Access Holdings said the new ordinary shares created in connection with the private placement, will be allotted at a price of N20.25 to one or more investors in such tranches and on such terms and conditions as shall be determined by the Board.
Access Holdings Plc Board of Directors is authorised to consider, negotiate, approve, and finalise the list of potential private placement investors; determine the structure, valuation, modalities, and timeline for the private placement.
The Board was also authorised to consider, negotiate, approve and finalise the list of potential private placement investors; determine the structure, valuation, modalities and timeline for the private placement.
The shareholders also approved for the issued share capital of Access Holdings Plc to be increased from N26 658 billion to N27.646 billion by the creation and addition of 1,975,308,641 ordinary shares of 50 kobo each ranking pari-passu with the existing ordinary shares of the Company.
Nigeria Customs Service (NCS) has imposed a three per cent surcharge on Deposit Money Banks (DMBs) over delays in the remittance of Customs revenue by designated banks.
The development was disclosed by Abdullahi Maiwada, national public relations officer of the Service, in a statement titled “Nigeria Customs Service Commences Enforcement of Penalties Against Designated Banks for Delayed Remittance of Customs Revenue.”
The agency stated that delays in remitting collected Customs revenue constitute a breach of remittance obligations and negatively impact the efficiency, transparency and integrity of government revenue administration.
Maiwada explained that any Designated Bank that fails to remit collected Customs revenue within the prescribed period will be liable to penalty interest, adding that affected banks will receive formal notifications detailing the delayed amount, applicable penalty and the timeline for settlement.
“The NCS has noted instances of delayed remittance of Customs revenue by some Designated Banks following reconciliation of collections processed through the B’Odogwu platform. Such delays constitute a breach of remittance obligations and negatively impact the efficiency, transparency and integrity of government revenue administration.
“In line with the provisions of the Service Level Agreement (SLA) executed between the Nigeria Customs Service and Designated Banks, the Service hereby notifies stakeholders of the commencement of enforcement actions against banks found to be in default of agreed remittance timelines.
“Accordingly, any Designated Bank that fails to remit collected Customs revenue within the prescribed period shall be liable to penalty interest calculated at three per cent above the prevailing Nigerian Interbank Offered Rate for the duration of the delay. Affected banks will receive formal notifications indicating the delayed amount, applicable penalty and the timeline for settlement.”
Maiwada further advised Designated Banks to strengthen their internal controls, ensure strict adherence to remittance timelines and comply fully with the provisions of the SLA.
He reiterated that the Service remains committed to enforcing accountability, safeguarding government revenue and promoting a transparent and predictable financial system in support of national economic development.
“The Service further notes that persistent or repeated non-compliance with the terms of the SLA may attract additional sanctions, including regulatory and administrative measures, as provided under the Agreement and relevant laws guiding Customs revenue collection.
“The NCS reiterates that prompt, accurate and complete remittance of Customs revenue is a fundamental obligation of Designated Banks. Any payment of collected revenue into unauthorised accounts, whether deliberate or erroneous, will be treated as a serious violation and addressed in accordance with the SLA and applicable legal frameworks.
“Designated Banks are therefore advised to strengthen internal controls, ensure strict adherence to remittance timelines and comply fully with the provisions of the SLA. The Service remains committed to enforcing accountability, safeguarding government revenue and promoting a transparent and predictable financial system in support of national economic development,” he added.
The World Bank is set to approve a $500m loan to Nigeria on Friday (today) as part of efforts to expand access to finance for micro, small and medium enterprises across the country, according to Punch.
The proposed facility, titled the Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) Project, aims to mobilise private capital and promote innovative financial products for small businesses, according to information obtained from the World Bank.
Negotiations on the loan are ongoing, and approval by the World Bank Group’s board is expected on Friday.
The approval, expected on December 19, 2025, will see the World Bank commit $500m to the project out of an estimated total cost of $2.39bn.
Of the World Bank financing, $400m will be provided by the International Bank for Reconstruction and Development, while $100m will come from the International Development Association.
The Federal Government will be the borrower under the arrangement, with the Development Bank of Nigeria serving as the implementing agency with overall responsibility for managing the funds.
The remaining $1.89bn required for the project is expected to be provided by commercial lenders as unguaranteed financing.
According to the World Bank, the FINCLUDE project will leverage the platforms of the Development Bank of Nigeria and its subsidiary, Impact Credit Guarantee Limited, to deepen credit access for MSMEs.
“The proposed FINCLUDE Project leverages the platforms of the Development Bank of Nigeria and its subsidiary, the Impact Credit Guarantee Limited, to drive inclusive MSME finance,” a document from the World Bank read.
“Through these catalytic institutions, the project will deploy a package of complementary, inclusive, and innovative instruments tailored to the diverse needs of MSMEs in Nigeria.”
The World Bank described DBN as “a partner well known to the World Bank with high implementation capacity and a proven track record in designing and executing complex, innovative projects,” noting that its role would be central to the success of the intervention.
The project is structured around three main components. These include the provision of inclusive and innovative MSME finance products, the de-risking and mobilisation of private capital through partial credit guarantees, and technical assistance aimed at modernising and digitising Nigeria’s MSME finance ecosystem.
Under the first component, the World Bank said the project would provide Tier 2 subordinated capital to eligible financial institutions and support the establishment of an MSME investment fund to deliver equity and long-term debt financing to small businesses.
The bank said this approach would help “crowd-in private capital, test market innovations and promote financial sustainability” within the MSME segment.
Also, the project will offer targeted technical assistance to strengthen the capacity of financial institutions, improve regulatory oversight and modernise the MSME finance value chain linking DBN, lenders and entrepreneurs.
In its appraisal report, the World Bank highlighted Nigeria’s ongoing economic reforms, describing the country as being “in a critical transition.”
It noted that the removal of fuel and foreign exchange subsidies, alongside the unification of exchange rates, had begun to stabilise the economy and restore investor confidence.
“These reforms have improved fiscal space, enhanced FX liquidity, and eased inflation to 18 per cent as of September 2025,” the report stated, adding that growth prospects were strengthening, with the International Monetary Fund projecting 3.9 per cent real GDP growth in 2025.
Despite these improvements, the World Bank warned that access to finance remained uneven, particularly for MSMEs, women and the agriculture sector.
It noted that agriculture accounted for just over five per cent of total bank credit in 2024, while high interest rates and shallow credit penetration continued to constrain lending to smaller enterprises.
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