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Currency Market: Rising Political Uncertainty Weighs On Sentiment

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FXTM Research Analyst Lukman Otunuga comments on WTI Crude was exposed to further losses on Wednesday after the shocking increase in U.S fuel inventories and decline in Chinese demand revived concerns of the excessive oversupply in the global markets.

Stock markets were chaotic this week with most major arenas violently swinging between losses and gains due to the heightening political risks across the globe, escalating Trump developments and ongoing Brexit woes.

Asian markets traded mixed on Wednesday’s the Trump-off trading mood dented investor risk sentiment. With depressed oil prices potentially fuelling the risk aversion, European markets could come under renewed selling pressures in the short term. Wall Street remains gripped by the Trump uncertainty and the sensitivity in American stocks should be expected to rise as investors seek further clues on what policies US President Donald Trump may unravel this week. The threat of protectionist policies impacting global growth and overall political uncertainty eroding risk appetite could leave stock markets vulnerable to heavy losses in the medium to longer term.

Dollar Remains Trumped
The Greenback staged an impressive rebound on Tuesday following hawkish comments from a US Federal Reserve official which reinforced expectations of a US interest rate hike in March.

While the prospects of higher US rates may ensure the Dollar remains buoyed in the medium term, the erratic Trump policies coupled with concerns over protectionism impacting US growth could expose the Greenback to downside risks in the short term.

It should be kept in mind that the driver behind the Dollar’s phenomenal gains was optimism over fiscal policies boosting US growth, and there is now a risk of the currency being sold incessantly if investors are left disappointed.

Technical traders may observe how the Dollar Index trades within the daily bearish channel with a breakdown back below 100.00 encouraging a further decline lower towards 99.00.

Sterling Dictated by Brexit Woes
Sterling was extremely volatile this week as market participants reacted to signs of the UK government giving parliament a stronger say in the critical Brexit negotiations. It has become quite clear that Sterling remains dictated by the Brexit developments with price sensitivity set to heighten in the coming weeks as the article 50 invoke looms.

The overall sentiment towards the Pound remains heavily bearish and uncertainty should provide a solid foundation for sellers to drag the Sterling/Dollar back towards 1.2350. 

From a technical standpoint, the GBPUSD currently resides in a wide range but a breakdown below the pivotal 1.2350 level could encourage a steeper selloff back towards 1.2050.

Commodity Spotlight – Wti Oil
WTI Crude was exposed to further losses on Wednesday after the shocking increase in U.S fuel inventories and decline in Chinese demand revived concerns of the excessive oversupply in the global markets.

The resurgence of U.S shale amid the rising oil could undermine the efforts of OPEC and Non-OPEC members in mitigating the global oversupply consequently leaving oil prices vulnerable.

There is a threat of the OPEC production cut deal falling apart in the future if U.S shale continues to pump incessantly.

Although oil prices were initially buoyed by the optimism over OPEC and Non-OPEC members achieving roughly 82% compliance with its production cut, the big elephant in the room known as U.S shale should limit upside gains.

The breakdown below $52 on WTI could spark a further selloff lower towards $51.


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E-Financial

CBN Investigates 55 Companies over Forex Infractions

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Amidst sustained pressures on Nigeria’s official foreign exchange resources, the Central Bank of Nigeria (CBN), has opened investigations into foreign exchange transactions of 55 companies and individuals.

The apex bank linked them to foreign exchange deals outside the official Investors & Exporters (I&E) window.

CBN Investigates 55 Companies over Forex Infractions

Mr. Godwin Emefiele, CBN governor

The I&E window was created by the CBN as the legitimate platform for buying and selling of foreign currencies.

Some of the major corporate organisations in the list include Stallion Nigeria Limited, a conglomerate involved in several sectors of the Nigerian economy.

The list also includes Nigeria’s leading electronic payment company, Interswitch Nigeria Limited, as well as a leading global shipping line, CMA CGM Nigeria Shipping Limited.

Other big names in the list include Petro-Afrique Energy Services Limited, Steel Force Far East Limited, Auto Petroleum Company Limited, Cavendish Mechanicals Limited, Aquashield Oil & Marine Limited, Haitch & Elf Integrated Services Limited, Fenog Nigeria Limited, and Promasidor Nigeria Limited.


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FG Makes u-Turn on Bank Account Re-Registration

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Federal government on Friday apologised for asking all account holders in financial institutions in the country to re-register their personal details.

FG makes u-Turn on Bank Account Re-Registration

Recall that the federal government had on Thursday ‎ordered that all persons holding accounts across financial institutions and insurance firms should complete and submit self-certification forms to their respective financial institutions.

The notice issued by the government to that effect read, ‎“This is to notify the general public that all account holders in Financial Institutions (Banks, Insurance Companies, etc.) are required to obtain, complete, and submit Self – Certification Forms to their respective Financial Institutions.

“Persons holding accounts in different financial institutions are required to complete and submit the form to each one of the institutions. The forms are required by the relevant financial institutions to carry out due diligence procedures, in line with the Income Tax Regulations 2019.‎”

The directive raised eyebrows, as account holders already possessed Bank Verification Numbers.

Following widespread condemnation that trailed the directive, the Federal Government backtracked on Friday, saying the fresh guidelin‎e was not for all Nigerians.

The government attributed the development to misinformation.

The clarification issued by the government on Friday read, ‎“We apologise for the misleading tweets (now deleted) that went up yesterday, regarding the completion of self-certification forms by Reportable Persons. The message contained in the notice does not apply to everybody. ‎FIRS will clarify Nigerians on the objectives of the directive.”

Also on Friday, FIRS, in a statement posted on Twitter, explained that the guidelines were only for non-residents, as well as people paying tax in more than one country.

Parts of the FIRS statement read, “The Self Certification Form is basically to be administered on Reportable Persons, holding accounts in Financial institutions, that are regarded as “Reportable Financial Institutions” under the CRS.

“Reportable persons are often non-residents and other persons, who have residence for tax purposes in more than one jurisdiction or country.”

“The information that indicates an account holder is a resident for tax purposes in more than one jurisdiction, is expected to be available to Financial Institutions during account opening processes, for the KYC and AML purpose.”


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Stanbic IBTC Bank Disowns Lagos ATM Fraudster

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Stanbic IBTC Bank PLC has disowned Tope Olajide, 22-year-old fraudster arraigned for theft of customers deposits.

Stanbic IBTC Bank Disowns Lagos ATM Fraudster

The Bank said this in a statement on Wednesday.

The statement said: “The attention of the management of Stanbic IBTC Bank PLC has been drawn to news currently circulating in the media, about the alleged arraignment of staff of the Bank on charges bordering on the theft of customers deposits.

“The Bank would like to clarify that the defendant, a 22-year-old Tope Olajide, IS NOT, and was at no point in time an employee of Stanbic IBTC Bank PLC.

“The alleged culprit was apprehended around 7:30 am, on Thursday, 27 August 2020, by security operatives after he was exposed by CCTV footage using ATM cards he had allegedly stolen and converted, to make withdrawals from the accounts tied to the stolen ATMs.

“The CCTV footage also showed the alleged culprit pretending to assist customers at ATMs whilst also attempting to fraudulently dispossess the customers of their ATMs.

“He was subsequently arraigned before an Ikeja Magistrate Court on Monday, 14 September, for stealing the debit cards of two customers and using them to unlawfully withdraw the sum of N427,000.

“The Bank would also like to implore members of the public to be security conscious when conducting transactions at ATMs. Customers are advised to report any suspicious actions around them to security operatives who are usually stationed around the Bank’s ATMs, when carrying out transactions at any of our ATM locations.

“As an organisation, we hold dear the values of integrity, and we will continue to prioritise the safety of our customers effectively.”


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