British pound hits 11-week low on persistent hard Brexit uncertainty – Reuters

By Jemima Kelly | LONDON

Data suggesting the British economy kept its momentum at the end of 2016 was outweighed on Wednesday by uncertainty over whether Britain will undergo a “hard Brexit” from the EU, sending the currency to an 11-week low against the dollar.

Industrial output rose 2.1 percent in November, recovering from a 1.1 percent drop in October and beating expectations for a 0.8 percent jump.

But after initially inching higher on the data, the pound quickly gave up those gains as Brexit dominated. The pound briefly dipped below $1.21 GBP=D4 for the first time since Oct. 25, before recovering to $1.2130, leaving it down 0.4 percent on the day.

 
 

The pound posted its worst day in three months on Monday after Prime Minister Theresa May said she was not interested in keeping “bits” of its European Union membership.

That sparked expectations Britain was heading for a hard Brexit, in which access to the single market plays second fiddle to immigration controls.

Analysts said the impact of such an outcome remained the key driver for sterling on Wednesday.

“Fresh shorts are being put on – this is kind of a repeat of what happened around the (ruling Conservative) party conference in October, with the market pricing in a harder Brexit,” said UBS Wealth Management currency strategist Geoffrey Yu.

“The data was pretty firm,” he added. “Every indication says demand hasn’t really fallen yet in the UK, and for an economy that’s still largely domestic-demand driven that’s not a bad thing. So even though the Brexit narrative is clearly undermining the currency, the economic narrative is different.”

Yu said investors were not sure how to react to an article in the Guardian newspaper that reported government ministers had conceded they would lose a Supreme Court appeal to be able to formally trigger Brexit talks without parliamentary approval, as there was “no new information” in the story.

Earlier, Britain’s second-biggest supermarket, Sainsbury’s, followed fellow supermarket chain Morrisons by reporting better-than-expected sales over Christmas.

“Data on the whole is coming through pretty solid, but sterling cannot capture a rally,” said Mizuho’s head of hedge fund FX sales, Neil Jones.

“Corporates and investors in the UK and overseas appear to be writing off good news on the basis that bad news lies ahead. If a market cannot go up on good news it must go down (and) today is no exception.”

Sterling has fallen around 19 percent against the dollar since Britons voted on June 23 to leave the EU, and around 12 percent against the euro, which has itself been vulnerable to political uncertainty.

(Editing by Tom Heneghan)

China’s central bank launches spot checks on bitcoin exchanges – Reuters

By John Ruwitch and Winni Zhou | SHANGHAI

China’s central bank said on Wednesday it launched spot checks on major bitcoin exchanges in Beijing and Shanghai, knocking the price of the cryptocurrency down by more than 6 percent.

The probe of bitcoin exchanges, including BTCC, Huobi and OKCoin, was to look into a range of possible rule violations, including market manipulation, money laundering and unauthorized financing, the People’s Bank of China (PBOC) said. It did not say if any violations had been found.

On the Europe-based Bitstamp exchange, the bitcoin price BTC=BTSP fell as much as 7 percent. By 1030 GMT (5:30 a.m. ET), it traded down around 4 percent. On Huobi’s website, the price quoted in yuan CNY=CFXS slid nearly 10 percent before pulling back to trade about 6 percent lower. 

Chinese authorities have been ratcheting up efforts to stop capital outflows and relieve pressure on the yuan to depreciate. The currency lost more than 6.5 percent against the U.S. dollar last year.

With bitcoin’s soaring price and the relative anonymity it affords, some believe the digital currency has become an attractive option for tech-savvy Chinese to hedge against the yuan and circumvent rules that limit the amount of foreign exchange individuals can buy each year.

The Shanghai arm of the PBOC said it visited BTCC on Wednesday.

“The checks focused on whether the firm was operating out of its business scope, whether it was launching unauthorized financing, payment, forex business or other related businesses, whether it was involved in market manipulation, anti-money laundering or (carried) fund security risks,” it said.

In a separate statement, the PBOC in Beijing, where officers visited the offices of OKCoin and Huobi, said “the spot checks were focused on how the exchanges implement policies including forex management and anti-money laundering”.

Shanghai-based BTCC’s CEO Bobby Lee confirmed the visit, but said he believed the company was not out of line.

“We’re definitely vigilant. We think we are in compliance with all the current rules and regulations of running a bitcoin exchange in China,” he told Reuters by phone.

“I wouldn’t call it an investigation. I think they are working closely with us to learn more about our business model and the bitcoin exchange industry. We had a very fruitful meeting today,” Lee said.

A Huobi executive who declined to be named confirmed the PBOC visited their office on Wednesday, but declined to provide details. A spokeswoman for OKCoin told Reuters its platform was operating normally, and it was working with the authorities.

Last week, PBOC officials meet with the three exchanges, and the central bank publicly urged investors to take a rational and cautious approach to investing in bitcoin.

(Additional reporting by Brenda Goh and Samuel Shen; Editing by Jacqueline Wong and Ian Geoghegan)

Dollar grinds higher ahead of Trump news conference – Reuters

By Patrick Graham and Aine Quinn | LONDON

The dollar gained ground against the yen, euro and pound on Wednesday, as expectations of a pro-growth message from U.S. President-elect Donald Trump’s first news conference prevailed over worries about what he will say on trade and China.

The dollar has gained broadly since Trump’s victory in November as investors bet he would boost public spending and spur repatriation of overseas funds by U.S. companies, policies expected to bring higher inflation and interest rates.

But more doubts have emerged in recent weeks about that narrative, and investors will have a close eye on what the new president says about labeling China a currency manipulator and free trade more generally.

 
 

“The surprise would be if he talks about his concerns about dollar strength,” said Simon Derrick, head of research at Bank of New York Mellon in London.

“He has made comments suggesting he is uncomfortable with a strong dollar, but the market has largely ignored them.”

The dollar index rose 0.3 percent to 102.37, at the top end of a range it has held for the past week and off a 14-year peak of 103.82 hit on Jan. 3. .DXY Against the yen, it gained almost half percent to 116.28 yen, still two percent off almost one-year highs hit in December.

The euro was also down 0.4 percent at $1.0515 EUR= after brushing a 10-day high of $1.0628 overnight. Trump’s news conference – his first since the election – is due to start at around 11:00 EST (1600 GMT).

“The dollar is still holding up quite well and there is a presumption that we are going to get support from tighter monetary policy and looser fiscal policy,” said Jeremy Stretch, head of currency strategy at CIBC in London.

“Overall we’re still constructive but it does look more a case of playing the end of the rally before we see a correction later this year.”

The morning’s other big mover in Europe was sterling, hit by a worse than expected trade deficit after a week of political news which added to fears Britain is heading for an economically damaging “hard Brexit” from the European Union.

The pound fell by as much as 0.6 percent to trade below $1.21 for the first time since late October, before steadying at $1.2112.

(Additional reporting by Shinichi Saoshiro in TOKYO; Editing by Mark Trevelyan and Alexandra Hudson)

Global stocks and dollar firmer as Trump news conference approaches – Reuters

By Vikram Subhedar | LONDON

World stocks and the dollar rose before a news conference by U.S. President-elect Donald Trump in which he is expected to give more details about his plans for the U.S. economy.

Trump’s campaign calls for tax cuts and more infrastructure spending have boosted U.S. shares and the dollar, but his protectionist statements and a flurry of off-the-cuff Tweets have kept many investors from adding to risky positions.

The UK’s FTSE 100 was poised for a record twelfth straight day of gains while European shares rose 0.2 percent. 

Stock futures on Wall Street were 0.1 percent firmer though the post-U.S. election rally is showing signs of running out of steam.

Trump has vowed to label China a currency manipulator on his first day in office on Jan. 20 and has threatened to slap huge tariffs on imports from China.

U.S. House of Representatives Speaker Paul Ryan and top members of Trump’s transition team are discussing a controversial plan to tax imports.

Economists have warned that protectionist measures could stifle international trade and hurt global growth.

That brings Trump’s press conference, scheduled for 11:00 EST, into sharp focus.

“From a currency perspective, markets will aim to get a clearer picture on trade, fiscal stimulus and the new administration’s relationship to the Fed,” Morgan Stanley strategists wrote in a note to clients.

The dollar inched higher against the yen on Wednesday but was 0.4 percent firmer against the basket of currencies used to measure its broader strength.

The dollar has gained broadly since Trump’s election in November as investors bet he would boost public spending and spur repatriation of overseas funds by U.S. companies as well as higher inflation and interest rates.

But more doubts have emerged in recent weeks about that narrative, and investors will have a close eye on what the new president says about trade and relations with China.

Bank of America-Merrill Lynch strategists warned on Wednesday that a worrying consensus has developed in financial markets with analysts and investors overwhelmingly bearish on bonds and positive on developed market stocks, financials and the U.S. dollar.

Sterling meanwhile edged towards a 10-week low against the dollar on Wednesday, kept under pressure by fears that Britain will undergo a “hard” exit from the EU in which access to the single market will play second fiddle to immigration controls.

The Turkish lira fell to new lows despite efforts by the country’s central bank to support it with pressures piling on the economy.

An auction of German debt was expected to go down well with investors looking for safe havens. Portuguese yields held near 11-month highs as the country prepared for its toughest bond sale in years.

In commodity markets, oil rose, lifted by reports of Saudi supply cuts to Asia, but gains were capped by a lack of detail about the reductions and because of signs of rising supplies from other producers.

Prices for Brent futures LCOc1, the international benchmark for oil prices, were trading at $53.94 per barrel at 1200 GMT, up 30 cents from their previous close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $51.11 a barrel, up 29 cents.

(Editing by Hugh Lawson and Toby Chopra)

BDC Set To Introduce Online Exchange Rate Platform – Channels TV

Nigeria’s Bureau De Change (BDC), operators, are set to introduce an online exchange rate platform and have also fixed the Naira to Dollar reference rate at 399. 

The BDC Acting President, Mr Aminu Gwadabe, explained that the platform would help reduce the gap between the official inter-bank rate and parallel market rates, as well as eliminate multiple exchange rates in the country.

This was revealed at a press conference in Lagos, where Mr Gwadabe confirmed plans by licensed fx retailers to launch the online platform for thousands of its members starting from the end of January.

Global stocks and dollar firmer as Trump news conference approaches – Reuters

By Vikram Subhedar | LONDON

World stocks and the dollar rose before a news conference by U.S. President-elect Donald Trump in which he is expected to give more details about his plans for the U.S. economy.

Trump’s campaign calls for tax cuts and more infrastructure spending have boosted U.S. shares and the dollar, but his protectionist statements and a flurry of off-the-cuff Tweets have kept many investors from adding to risky positions.

The UK’s FTSE 100 was poised for a record twelfth straight day of gains while European shares rose 0.2 percent. 

Stock futures on Wall Street were 0.1 percent firmer though the post-U.S. election rally is showing signs of running out of steam.

Trump has vowed to label China a currency manipulator on his first day in office on Jan. 20 and has threatened to slap huge tariffs on imports from China.

U.S. House of Representatives Speaker Paul Ryan and top members of Trump’s transition team are discussing a controversial plan to tax imports.

Economists have warned that protectionist measures could stifle international trade and hurt global growth.

That brings Trump’s press conference, scheduled for 11:00 EST, into sharp focus.

“From a currency perspective, markets will aim to get a clearer picture on trade, fiscal stimulus and the new administration’s relationship to the Fed,” Morgan Stanley strategists wrote in a note to clients.

The dollar inched higher against the yen on Wednesday but was 0.4 percent firmer against the basket of currencies used to measure its broader strength.

The dollar has gained broadly since Trump’s election in November as investors bet he would boost public spending and spur repatriation of overseas funds by U.S. companies as well as higher inflation and interest rates.

But more doubts have emerged in recent weeks about that narrative, and investors will have a close eye on what the new president says about trade and relations with China.

Bank of America-Merrill Lynch strategists warned on Wednesday that a worrying consensus has developed in financial markets with analysts and investors overwhelmingly bearish on bonds and positive on developed market stocks, financials and the U.S. dollar.

Sterling meanwhile edged towards a 10-week low against the dollar on Wednesday, kept under pressure by fears that Britain will undergo a “hard” exit from the EU in which access to the single market will play second fiddle to immigration controls.

The Turkish lira fell to new lows despite efforts by the country’s central bank to support it with pressures piling on the economy.

An auction of German debt was expected to go down well with investors looking for safe havens. Portuguese yields held near 11-month highs as the country prepared for its toughest bond sale in years.

In commodity markets, oil rose, lifted by reports of Saudi supply cuts to Asia, but gains were capped by a lack of detail about the reductions and because of signs of rising supplies from other producers.

Prices for Brent futures LCOc1, the international benchmark for oil prices, were trading at $53.94 per barrel at 1200 GMT, up 30 cents from their previous close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $51.11 a barrel, up 29 cents.

(Editing by Hugh Lawson and Toby Chopra)

Bitcoin slides after China central bank launches investigation – Reuters

The price of digital currency bitcoin slid around $50 on Wednesday after China’s central bank said it had launched spot investigations on bitcoin exchanges in Beijing and Shanghai in order to fend off market risks.

The investigation of bitcoin exchanges, including BTCC, Huobi and OKCoin, was to look into possible market manipulation, money laundering, unauthorized financing and other issues, according to the statements posted on the People’s Bank of China’s website.

Bitcoin fell from around $909 on the Europe-based Bitstamp exchange to the day’s low of $861, leaving it down almost 5 percent BTC=BTSP.

 
 

(Reporting by Jemima Kelly; Editing by Patrick Graham)

    Nigeria’s high inflation rate set to fall to 18.3% – Businessday

    By OLamiju

     

    Nigeria’s rate of inflation is projected to fall for the first time in 14 months to 18.3 per cent when the December data is released according to a note by analysts at the Financial Derivatives company.

    It will represent a 1.18% decline from November’s inflation rate and it will be the first time that headline and month on month inflation will switch trajectories.

    According to the note, “this can be attributed to waning base year effects. However, we do not expect this development in the monthly rate to be a permanent one.

    “The change in direction is what the fiscalists and doves in the monetary policy committee need to support arguments for an accommodative monetary policy stance to complement the fiscal stimulus.”

    Economists say even if estimates actualize and inflation declines, it is still a mile away from the CBN’s comfort zone of 6-9%.

    A December decline coinciding with a sharp increase in the PMI is good news. It might be an indication that consumer resistance to retail price increases may be driving prices down. It might also project that a high inventory level and borrowing cost environment are coaxing producers to bring down their prices.

      Two months FX utilisation show Ecobank, Access as leaders – Businessday

      The foreign exchange utilisation for the months of September and October 2016 revealed Ecobank and Access bank plc leading other lenders.

      Ecobank which took the first position in September utilised a total of $111.2 million in foreign exchange. It also took the second position in October with a total of $134.9 million or 15.55 percent of the total.

      Access bank emerged the first lender to spend a total of $162.0 million or 18.67 percent foreign exchange in October 2016, in September of the same year; it took the second position spending a total of $93.6 million or 14.18 percent.

      The 24 financial institutions in the country utilised a total $660.1 million foreign exchange in September 2016, while a total of $867.8 million was utilised in October the same year.

      Standard Chartered bank took the third position in both months under review, utilising $76.6 million in September and $78.6 million in October 2016.

      Coronation and FBN Merchant bank took the 23rd position in the months under review. They utilised $79,252.07 and $303,501.77 in foreign exchange in September and October 2016 respectively.

      The Naira was steady against the USD by -53 percent Year To Date at the Inter-bank market. The spot rate closed at N305.50/US$. Up to May 31, the exchange rate was pegged to $/N199, reinforcing CBN’s commitment to a managed foreign exchnage rate.

      It depreciated in the parallel market, and fell to a historic low of N490/US$, further widening the gap between the parallel and interbank rates (which closed at N305.5/US$).The CBN liberalised the exchange rate with the introduction of flexible exchange rate regime in June 2016.

      The CBN sold about US$1.56 billion in forward auction via Special Secondary Market Intervention Retail Sales (SMIS). Some of the foreign exchange related policies and regulations in 2016 include sales of Foreign Currency Proceeds of International Money Transfer to BDCs subject to a maximum of US$30,000 to a BDC per week; and Selling Rate by the Banks to BDCs shall be Buying Rate from International Money Transfer Operators (IMTO) plus a margin not exceeding 1.5 percent.

      In a strategic business review released by Ecobank, money market related policies and regulations in 2016 include reduction in Cash Reserve Requirements (CRR) to enhance bank’s liquidity for real sector financing in January 8, 2016; guidelines for the Operations of Treasury Single Account (TSA) by State government in February 29, 2016, write-off fully provided Non- Performing Loans (NPLs), and acceptance of cheques deposit into saving account with Bank Verification Number (BVN) in June 28, 2016; Provisioning for foreign currency loans in June 27, 2016; and restriction from accessing CBN’s discount window on the settlement date for government securities auctions.

      HOPE MOSES-ASHIKE

        Naira unchanged as CBN, BDCs discuss N185 exchange rate spread – Businessday

        By HOPE MOSES-ASHIKE

        … as CBN auctions N195.6bn Treasury Bills

         
        The naira on Tuesday closed stable against the US dollar across segments of foreign exchange market, amid concern for huge exchange rate spread between the official and parallel market, according to findings.
        After trading on Tuesday, naira closed at N305 against the dollar, the same as two weeks ago at the interbank spot market. It closed at N490 and N400 per dollar at the Bureau De Change (BDC) segment and parallel market, respectively.
        The Central Bank of Nigeria (CBN) and the Association of Bureau De Change Operators of Nigeria (ABCON) are in discussion on how to reduce the exchange rate margin between the official and parallel market rates, which is put at N185.
        Aminu Gwadabe, acting president of ABCON, said the move would boost liquidity and attract foreign investors into the country.
        The naira lost a third of its official value against the dollar in 2016, after the bank scrapped a peg in a bid to alleviate dollar shortages. On the black market, the naira is worth about 40 percent less than the official rate, Reuters report.
        Finance minister, Kemi Adeosun, said last month that the central bank would try to narrow the gap, which the government said was hurting an already shaky economy, but gave no details.
        Nigeria plans to sell N195.96 billion ($644.08m) in short-dated treasury bills at an auction on January 19, the central bank said on Tuesday.
        The bank said it would sell N36.78 billion in three-month debt, N39.17 billion in six-month bills and N120 billion in one-year notes, using a Dutch auction system. Payment will be due the day after the auction.
        Nigeria issues treasury bills to fund its budget deficit, manage banking system liquidity and curb rising inflation.