Mixed economic data and minutes from the Fed’s December meeting weighed on dollar
By CHELSEY DULANEY
The dollar tumbled Thursday as investors grew cautious on the U.S. economic outlook.
The WSJ Dollar Index, which measures the U.S. currency against 16 others, fell 1% to 92.08, retreating further from the 14-year-highs hit earlier in the week.
Asian currencies broadly rose against the U.S. dollar Thursday after Federal Reserve minutes signaled uncertainty about Donald Trump’s impact on the economy.PHOTO: KAREN BLEIER/AGENCE FRANCE-PRESSE/GETTY IMAGES
Analysts said mixed economic data and minutes from the Federal Reserve’s December meeting weighed on the dollar, prompting some investors to dial back bullish bets on the dollar that have been popular since the November U.S. election.
“This is a realization that the market got ahead of itself,” said Vassili Serebriakov, a foreign-exchange strategist at Crédit Agricole.
Hedge funds and other speculators were holding about $25 billion in bullish dollar bets as of Dec. 27, its highest level in nearly a year, according to Commodity Futures Trading Commission data.
Disappointing private-sector hiring data cast some doubt on the health of the U.S. labor market ahead of Friday’s U.S. nonfarm payrolls report. Signs that the labor market is softening could hurt the Fed’s case for raising rates.
At the same time, a more dovish Fed would alleviate pressure on emerging-market economies, especially China. Higher U.S. rates typically boost the dollar, making emerging-market nations’ dollar-denominated debts more expensive to pay back.
Concerns over higher U.S. rates have battered the Chinese yuan in recent months and ramped up pressure on Chinese authorities to stem capital outflows.
On Thursday, the Chinese yuan rose over 1% against the dollar in offshore markets, on track for its biggest two-day gain since the currency began trading freely outside of mainland China in 2010.
Other emerging-market currencies also rallied, with the dollar falling 1.1% against the Korean won and 0.5% against the Malaysian ringgit.
U.S. dollar notes are seen in this November 7, 2016 picture illustration. Picture taken November 7. REUTERS/Dado Ruvic/IllustrationPHOTO: REUTERS
Economists surveyed by The Wall Street Journal had expected 183,000 new jobs and a jobless rate of 4.7%.
Analysts said the 2.9% increase in wages, the best annual gain in more than seven years, supported the dollar.
”What matters most right now is the pickup in the wage numbers,” said Mark McCormick, North American head of FX strategy at TD Securities. “It fits into this narrative that inflation is starting to accelerate. This, added with fiscal stimulus coming, provides more legs for the dollar in the first quarter.”
Wage growth has been sluggish throughout the economic recovery even as other indicators of labor-market health have rebounded strongly. Investors believe steady wage growth helps to drive prices and inflation higher, which supports the case for the Fed to raise interest rates.
Higher rates typically boost the dollar by making the currency more attractive to yield-seeking investors.
The dollar was broadly stronger against emerging-market currencies, which are often pressured by higher U.S. rates.
The dollar rose 0.8% against the Chinese yuan in offshore markets, recovering from its biggest two-day slump on record, while the greenback rose 0.6% against the Singapore dollar.
Offshore rate tumbles as much as 1.1%, most in a year
PBOC strengthens fixing less than forecasts from Mizuho, ANZ
What’s Triggering the Rally in the Yuan?
The offshore yuan pared its record weekly rally as China’s central bank raised its fixing less than projected and some analysts reiterated their bearish views on the currency.
The exchange rate fell as much as 1.1 percent to 6.8623 a dollar in Hong Kong, the most since this day last year, after a 2.5 percent surge over the past two sessions. Goldman Sachs Group Inc. advised clients that the best times to bet against the yuan have tended to be after interventions that flushed out bearish positions, or when China concerns were off traders’ radar screens.
Yuan short sellers were squeezed in Hong Kong this week after interbank borrowing rates soared, the dollar weakened and Bloomberg News reported that Chinese policy makers are preparing contingency plans to support the exchange rate. The move widened the offshore yuan’s premium over the onshore rate to 1.6 percent, the most since February last year. While borrowing rates in Hong Kong remained elevated on Friday, a broad recovery in the U.S. currency eased some of the pressure on bears.
“The offshore yuan is sinking because there is some recovery in the dollar, perhaps the unwinding of short-yuan positions has mostly been done, and it’s closing the gap with the onshore currency,” said Roy Teo, senior currency strategist at ABN Amro Bank NV in Singapore. The yuan is likely to weaken this year as capital outflows continue and the U.S. Federal Reserve increases interest rates, Teo said.
China’s central bank raised its daily reference rate by 0.92 percent to 6.8668 per dollar on Friday, following a 1 percent drop in a gauge of the greenback’s strength overnight. The offshore yuan was trading 0.8 percent weaker at 6.8457 per dollar as of 5:23 p.m. in Hong Kong, paring its weekly gain to 1.9 percent, the most in data going back to 2010. The onshore rate slumped 0.6 percent. Friday’s fixing was weaker than Mizuho Bank Ltd.’s prediction of 6.8447 and Australia & New Zealand Banking Group Ltd.’s estimate of 6.8456.
The three-month yuan interbank rate in Hong Kong, known as Hibor, surged to a record high, while the overnight rate jumped 23 percentage points to 61 percent, the highest since last January’s cash crunch. Rising interbank rates can make some short positions prohibitively expensive.
The yuan is giving back some of its gains after a week that echoed the short squeeze in January of last year. That abrupt reversal marked the beginning of a nearly 5 percent rally lasting two months.
Chinese policy makers have several reasons to engineer a stronger or stable yuan in the short term. U.S. President-elect Donald Trump has pledged to label the country a currency manipulator on his first day in office, while the exchange rate came close to breaking through the psychologically-important level of 7 per dollar earlier this week. Policy makers also want to avoid a flood of capital outflows as citizens’ annual foreign-exchange quotas reset for the new year.
Still, the analyst consensus suggests China will eventually let the yuan continue its descent. The exchange rate will fall to 7.16 per dollar by year-end before sliding to 7.3 the following year, according to the median of projections compiled by Bloomberg.
Goldman researchers see an even quicker retreat. The Chinese currency will probably drop to 7.3 per dollar by December, emerging-market strategists led by Kamakshya Trivedi in London predicted in a note dated Thursday.
“The squeeze will have a temporary impact,” Luke Spajic, head of emerging Asia portfolio management at Pacific Investment Management Co., said in Hong Kong. “But I don’t think it necessarily changes the challenge, and the challenge is they still have to worry about the $50 billion to $60 billion a month of outflows and what they’re going to do about the value of their currency. And they have to face the fact that the U.S. is probably going to keep hiking rates.”Benjamin Fuchs, chief investment officer at the $2 billion hedge fund BFAM Partners (Hong Kong), said China’s moves to repeatedly tighten capital controls risk eroding confidence in its currency. The dollar’s advance against the yen and other currencies has also increased competitive pressure on China to let the yuan depreciate, he said.
“We’re starting to see more and more of a negative cycle being created,” Fuchs said. China’s attempts to curb outflows are “just making people want to take money out quicker, and make companies change their behavior.”
— With assistance by Robin Ganguly, Justina Lee, and Tian Chen
Yuan accounts for 98% of bitcoin trading due to zero fees
Tighter Chinese regulation is inevitable: Shenwan Hongyuan
All-Time High: Bitcoin Delivers Many Happy Returns
For Felix Yang, nothing beat bitcoin.
After he bought several million yuan worth of the cryptocurrency in June, the 34-year-old finance worker watched as prices skyrocketed 43 percent in the second half of 2016 before reaching an all-time high of $1,162 this week.
Yang is now looking to his nation’s policy makers with trepidation. The last time prices reached a record in 2013, China tightened rules on bitcoin transactions, spurring a rout that caused him losses. Jitters among buyers increased after the asset plunged as much as 23 percent on Thursday before rebounding back above $900.
“The Chinese government’s policy is an important factor,” said Yang, who owns about $2 million of bitcoins and lives in Suzhou, Jiangsu. “There may be room for further gains in price, but there’ll be a big pullback soon. It’s hard to sustain such a rapid rise for a long time.”
Bitcoin has rallied since early 2015 as Chinese buyers, who make up the majority of trading, turned to alternative assets to hedge against the weakening yuan and take cash out of the nation. But with officials tightening capital controls, there’s increased speculation that the digital asset will be the next target — even though the total value of bitcoins of around $16 billion is minuscule compared with most mainstream asset classes in the nation.
Even after Thursday’s slump, the cryptocurrency has climbed 2 percent in the new year, extending a rally in 2016 that beat every major currency, stock index and commodity contract. Outside China, India and Venezuela’s ban on some bank bills and uncertainty over political shocks such as Donald Trump’s election and Brexit also boosted demandfor eight-year-old bitcoin, the supply of which is also curbed by its program.
The yuan accounted for 98 percent of bitcoin trading in the past six months, data from bitcoinity.org show — though this is inflated by the fact that Chinese exchanges, unlike most others, do not charge a transaction fee, said Bobby Lee, chief executive officer of BTCC, the most active exchange in the past month. China is also home to about two-thirds of the world’s bitcoin mining power.
By buying bitcoin onshore, selling it offshore for another currency and then moving the money to a bank account, Chinese individuals can take cash out of the country. The government has been stepping up requirements for citizens converting their yuan, which is already subject to a quota, and people familiar with the matter told Bloomberg News authorities are preparing contingency plans to curb outflows.
“Under regulations on cross-border flows, the appeal of using bitcoin to obtain foreign exchange and take capital out of the country will increase, especially for funds that may have been used in illegal operations such as money laundering,” said Qiu Difan, a Shanghai-based economist at SWS Research Co., a unit of Shenwan Hongyuan Group Co. “Regulators have always been passive about bitcoin. Tighter regulation is inevitable going forward.”
The government may work with bitcoin exchanges to prevent money laundering and possibly even directly limit trading, Qiu said.
Chinese regulators have shown concern over the cryptocurrency’s role before. In November, people familiar with the matter told Bloomberg News officials were studying measures to limit outflows via bitcoin and impose quotas on the amount that can be sent abroad. In 2013, the People’s Bank of China barred financial institutions from handling bitcoin transactions and said it isn’t a currency with “real meaning,” sparking a slide in price.
To BTCC’s Lee, the move was a “knee-jerk reaction” to the price gains then — and one authorities are unlikely to repeat. Policy makers would probably prefer to have licensed exchanges that give the PBOC information, especially since bitcoin’s nature makes it hard for authorities to eradicate anyway, Lee said.
“What they can do is crack down on bitcoin exchanges, but they can’t crack on bitcoin itself,” Shanghai-based Lee said. “If you actually shut down the bitcoin exchanges in China, the desire will just go underground, and when the desire goes underground, it’s out of control.”
The cryptocurrency’s immunity to changes in regulatory or monetary policies is precisely its appeal. Its supply isn’t determined by any central bank. A network of volunteers validate transactions via their computers, which require encrypted electronic signatures, and in return earn fees based on market prices.
Bitcoin tumbled from its record high on Thursday as the offshore yuan posted its biggest two-day rally on record amid speculation Chinese authorities engineered a liquidity crunch to discourage sales of the currency. Bitcoin gained 0.8 percent on Friday, paring Thursday’s plunge.
“There is speculation that the Chinese authorities may try and hamper the use of bitcoin as a way of getting around Chinese capital outflow restrictions,” Steven Englander, an analyst at Citigroup Inc., said in an e-mail. “At the best of times it is pretty illiquid, so even a small imbalance can have a big impact on price.”
The digital asset traded at 6,969.6 yuan ($1,008) on BTCChina.com as of 2:27 p.m. on Friday in Hong Kong, a 3 percent premium over the dollar price indicated by Bloomberg data based on spot rates. The yuan posted its biggest annual decline since 1994 last year, when bonds and shares also fell. Government measures to cool the housing market is fueling concern home prices are headed for a correction.Lackluster equity performance, a potential real-estate bubble, yuan weakness and capital controls are all driving Chinese demand for bitcoin, said Thomas Glucksmann, head of marketing at Gatecoin Ltd. in Hong Kong.
“Bitcoin is one of the few remaining investment opportunities that has so far received very little direct government scrutiny,” he added. “So for now, investors feel safe that the government will keep its hands off their digital funds.”
LAGOS Jan 6 (Reuters) – Nigeria plans to issue 340 billion to 430 billion naira ($1.12 billion to $1.41 billion) of local-currency bonds during the first quarter, the Debt Management Office said on Friday.
The debt office said on its website it would auction 110 billion to 140 billion naira worth of bonds maturing in 2021 and 85 billion to 105 billion naira in debt maturing in 2026. It will also sell 45 billion to 55 billion naira in bonds maturing in 2027 and 100 billion to 13According to the debt issuance calendar, the 2027 bond will be a new issue, in March. The rest will re-open previously issued debt, starting after Jan 18.
Africa’s biggest economy has proposed a 2017 budget deficit of 2.36 billion naira for this year. The government hopes to fund it by borrowing 1.254 trillion naira domestically and 1.067 trillion naira abroad.
But the government has already struggled to fund the 2016 budget after a planned Eurobond sale and World Bank loan were delayed.
($1 = 304 naira) (Reporting by Oludare Mayowa, editing by Larry King)
Bitcoin plunged by as much as 12 percent on Friday after China’s central bank urged investors to take a rational and cautious approach to investing in the digital currency, which is on track for its heaviest two-day drop in two years.
Bitcoin had been on a tear until Wednesday, gaining more than 40 percent in two weeks to hit around $1,139 on the Europe-based Bitstamp exchange, just shy of its all-time record of $1,163.
But the web-based digital currency, which has shown an intriguing inverse correlation to the Chinese yuan in recent months, plunged as the yuan soared on Thursday, falling as much as 20 percent at one point.
It continued that fall on Friday, with its losses accelerating after the central bank’s warning.
It fell as low as $871, down almost a quarter from its peak on Wednesday, before recovering to about $900 by 1455 GMT (9:55 a.m. ET). That still left it down 10 percent on the day and on track for its worst two-day performance since January 2015.
The Shanghai head office of the People’s Bank of China (PBOC) noted in a statement that bitcoin prices had shown abnormal fluctuations in recent days, and said those investing in it should do so carefully, with awareness of the currency’s volatility.
The PBOC’s words carried echoes of its 2013 warning that financial institutions should steer clear of the digital currency, which sparked a $300 slide in bitcoin.
The PBOC also repeated on Friday its 2013 view that bitcoin is not a currency and could therefore not be circulated as a real currency in the market.
“This is the Chinese authorities saying: we’re watching,” said Charles Hayter, CEO of digital currency data analysis website Cryptocompare. “The relative size of the bitcoin market is minor, but trading has reached up to $10 billion a day on the bitcoin-yuan pairs.”
“The full meaning of the government’s comments aren’t 100 percent clear, but restrictions and regulation of trading is one avenue that could affect volumes and therefore price.”
Hayter said trading between the yuan and bitcoin had made up about 98 percent of the market for the past six months, according to his analysis. Because there are no trading fees on Chinese exchanges, it is much easier to get in and out of trades and therefore creates a higher trading volume, he said.
Bitcoin can be used for moving money across the globe quickly and anonymously, and operates outside the control of any central authority.
That makes it attractive to those wanting to get around capital controls, such as in China, and also to investors who are worried about a devaluation in their currency – one of the reasons often cited for bitcoin’s surge in 2016. While the yuan fell 7 percent, its worst year since 1994, bitcoin outperformed all other currencies, with a 125 percent climb.
But many bitcoin experts say Chinese trading volumes are overstated and attribute sharp moves to speculation by, for example, U.S.-based hedge funds.
The volatile trading prompted officials from the PBOC’s Shanghai branch on Friday to meet representatives of a major bitcoin trading platform in China, BTCC.
“On January 6 the People’s Bank of China Business Management Department and the Beijing Municipal Bureau of Financial Affairs jointly met with the relevant regulatory authorities of the ‘currency network’,” the PBOC said in the statement.
BTCC said in a post on Twitter: “BTCC regularly meets with (the) PBOC and we work closely with them to ensure we are operating in accordance with the laws and regulations of China.”
“All of our users should be aware of the current policies on virtual goods as well as the risks involved in trading in volatile markets,” another Tweet read.
Eric Gu, a blockchain expert and founder of ViewFin, a Chinese blockchain start-up, said the PBOC meets the country’s major bitcoin exchanges regularly but had previously never made such meetings public.
But recent volatility has increased risks and has triggered fears that the market could be used as a channel for money laundering, he said.
“Previously, bitcoin trading volume was small, and money laundering was not possible in such a market,” said Gu. “Now, the volume is up … everyday, there are tens of billions of yuan worth of bitcoin changing hands. Volume is still (comparatively)small, but big enough to make the central bank worry.”
(Additional reporting by Yiming Shen in Shanghai, and Yawen Chen and Kevin Yao in Beijing; Editing by Hugh Lawson)
By Eromosele Abiodun Following the federal government ban on the importation of vehicles through the land borders, the Nigerian Customs Service (NCS), Seme Command, is set to lose 50 per cent of its monthly revenue valued at about N13 billion.
The Seme command of the NCS rakes in between N25 billion to N28 billion monthly with 50 per cent of that amount coming from vehicle importation.
The federal government had last year prohibited the importation of vehicles, new and old, through land borders, restricting all vehicle imports to Nigeria Sea Ports only.
However, Customs Area Controller of Seme Border, Victor Dimka said: “You will agree with me that over 50 per cent of our revenue comes from vehicles importation in this command, so that is going to be completely removed and what is left is what we should expect but we will create a very friendly environment just as we have been doing. You will also agree with me that the trade between Nigeria and the countries of the corridors are more or less informal, we will try to perfect on this relationship so as to make the place more business friendly.
“We will have flyers all over the places, we have help desk as you can see, our officers will tell people what must be done and what must not be done. So when you have two or more sources, two are removed, the one remaining we will guide Jealously, so importation on General goods from Benin Republic and other countries of the corridors to see we maximize revenue collection optimally.”
He said the Seme Command raked in over N1 billion a few working days to the take off of the ban following the rush to bring in vehicles into the country by importers.
He said the ban on vehicles as was announced by the federal government meant that the command will re-tighten its belts, “because it very difficult to see vehicles being smuggled through Seme even before the ban. So what is going to happen just to tighten what we have, make sure we deploy officers to all the likely routes they will follow. We have also discovered through intelligence new routes they are creating but by the time we finish, we are going to move officers there permanently.
“Of course there is going to be a combined force from the Command, Federal Operations, Compliance Team and even the military to ensure total blockage. Believe me, the war is going to be fierce because you know most of them in this vicinity see smuggling as a birthright, so they will want to try but we will resist them.
“They attempt justifying the act by saying its buying and selling. For them, it is merely traveling from one end to buy or trade at the other end. They even argue that their fathers have been trading between the Nigerian area and Benin Republic, so stopping them is like stopping what they have known to be doing for hundreds of years.” he said.
He added, “Those at the Nigerian end of the border share lingual, cultural and historical similarities with some communities in Benin. In fact, some Nigerian families have branches in Benin. As a customs officer, I have seen them celebrate, worship and mourn together as one. We tell them daily that what they enjoy is the ECOWAS treaty on free movement and that the family houses they claim to be going fall within the territory of a different state.
“This is where enlightenment comes in. I am regularly educating the people on Nigerian side that the Benin Republic is a different country from Nigeria and the dont share uniform economic policies. I keep telling traditional rulers and youths that every country like Nigeria has policies to protect their economies and import prohibition lists are part of these policies. This is the thrust of our Customs Community Relations efforts. We keep telling them not to see smuggling as a right or a legitimate source of livelihood.”
The country’s external reserves rose to $26.2bn on January 4, 2017, up from $25.8bn on December 30, 2016, the latest data from the Central Bank of Nigeria showed on Thursday.
The data also showed that the foreign exchange reserves ended last year with $25.84bn balance on December 30, 2016.
The foreign exchange reserves had risen to over four-month high of $25.7bn on December 28, up from $25.4bn on December 23.
The foreign exchange reserves have been rising in recent weeks following the gradual increase in oil price and production output.
In less than one week, the reserves rose by almost $300m from $25.084bn on December 16, 2016 to $25.361 on December 22.
However, currency and economic experts are not sure if the tiny upticks in the external reserves’ level are sustainable amid a falling naira and acute shortage of dollar in the foreign exchange markets and the economy.
Despite the staggering crash in the value of the naira against the United States dollar and other major foreign currencies last year, the CBN spent $4bn from the nation’s external reserves to defend the local currency in 12 months.
On December 22, 2015, the reserves stood $29.341bn. On December 22, 2016, the foreign exchange reserves stood at $25.361bn. This means that the external reserves were depleted by $4bn in 12 months.
The drop was estimated at 14 per cent. On December 31, 2015, the last day of the year, the external reserves stood at $29.069bn, compared to $25.84bn recorded on December 30, 2016.
The controversial defence of the naira by the CBN has come under severe criticism by economists, who believe that the forces of demand and supply should be allowed to determine the exchange rate of the naira, at least to a considerable level.
A senior associate in investment banking at Afrinvest, a research and investment firm, Mr. Ayodeji Ebo, said the gradual increase might only be sustainable if the oil price maintained its current level and there was a continuous ramp up in oil production.
Earlier, the reserves had fallen from $26bn on August 4, 2016 to $25.97bn on August 5 as the central bank stepped up dollar sales to boost liquidity at the interbank market and support the ailing naira.
The country’s fast-depleting reserves had recorded $23.89bn low on October 19.
At the end of November 2016, the reserves stood at $24.77bn, up from $23.95bn on October 31. The reserves have dropped by 15.9 per cent between 2015 and 2016.
An analyst at EY, Mr. Bisi Sanda, said there were indications that oil price and output would rise further this year.
He, however, said that the Federal Government needed to use this to the country’s advantage.
The Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said aside from the increases in oil price and output, the upticks in the external reserves could also be linked to the slowdown in the allocation of forex to the market by the CBN.
Oil prices were little changed on Friday after gaining nearly one per cent the day before on news that Saudi Arabia had cut production to meet OPEC’s agreement to reduce output.
Saudi Arabia has been curbing oil output in January by at least 486,000 barrels per day to 10.058 million bpd, fully implementing OPEC’s agreement to slow production, according to a Gulf source familiar with Saudi oil policy.
NYMEX crude for February delivery was at $53.69 a barrel by 0016 GMT, after closing up 50 cents on Thursday.
Brent crude for March delivery had yet to trade after settling up 43 cents at 56.89 dollars a barrel.
Prices had fallen earlier on Thursday after data showed a surprisingly large increase in US gasoline and distillate inventories.
United States crude stocks dropped sharply to end the year, the Energy Information Administration said, with a draw of 7.1 million barrels. However, stocks of gasoline and distillates surged as refiners ramped up production to reduce crude inventories, a year-end practice to avoid higher taxes.
Despite the economic recession in Nigeria, the value of transactions through point of sales, PoS payments increased significantly by 65 per cent to N651.37 billion in 11 months.
The figure which represents transactions from January to November 2016, almost doubles the N395.05 billion recorded in the corresponding period of 2015, data gathered from the Nigeria Interbank Settlement System Plc (NIBSS) revealed.
NIBSS data showed that with N81.15 billion, November 2016 recorded the highest value of transactions. In November 2015, a total of N40.25 billion transactions were recorded.
A breakdown of the value of PoS transactions in 2016 showed that in January, activities by individuals and corporates through this form of electronic payment system was N46.65 billion, whereas January 2015 was N31.8 billion.
All the months recorded significant increases over 2015.
In February 2016, the value of transactions was N46.14 billion (N30.97 billion 2015); March 2016 was N51.96 billion (N33.54 billion 2015); April 2016 N53.28 billion (N34.63 billion in 2015). In May 2016, the value was N55.29 billion (N35.93 billion). The N55.29 billion recorded in June 2016 was also much higher than the N34.01 billion recorded in 2015.
NIBSS data also showed an upward swing to N59.4 billion, in July. It was N35.84 billion in July 2015. Transctions in August last year totalled N64.11 billion, as against the N35.84 billion in August 2015; N66.44 billion as at September 2016, compared with the N39.61 billion recorded in the comparable month in 2015; and N71.81 billion in October 2016, up from the N41.25 billion it was as at October 2015.
The Central Bank of Nigeria (CBN) had introduced the cash-less policy with a view to significantly reduce the volume of cash-based transactions, and PoS was one of the tools to achieve this objective.
The policy was introduced for a number of key reasons, including to drive development and modernisation of the payment system in line with Nigeria’s vision 2020 goal of being amongst the top 20 economies by the year 2020. This is because an efficient and modern payment system is positively correlated with economic development, and is a key enabler for economic growth. The policy was also expected to reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach; improve the effectiveness of monetary policy in managing inflation and driving economic growth, as well as to curb some of the negative consequences associated with the high usage of physical cash in the economy.
As part of efforts to encourage Nigerians to widely make use of electronic payment systems, the Central Bank of Nigeria (CBN) had introduced an awareness campaign for electronic payment users. The scheme known as “Electronic Payment Incentive Scheme (EPIS)” was carried out by the CBN and the NIBSS. The scheme’s primary focus was to reward users of electronic payments platforms in Nigeria and to further encourage greater usage of PoS and other e-payment channels.
The scheme also permitted merchants to provide cash back services to cardholders following a purchase. This served as an incentive for merchants to earn a fee for providing a value-added service cash-out services to customers following a purchase of goods/services from their stores.
The chief executive officer of NIBSS, Ade Shonubi, had said the reward scheme was introduced to encourage people to use their cards at places other than the ATMs.