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YEAR TO DATE FOREIGN RESERVE MOVEMENT IN USD :CHART - abokiFX

JULY 13, 2017

  • The Naira has been trading below N400/$ for the past four months as the foreign reserves hover above $30bn. 
  • There is the risk of crude oil falling below $40 a barrel which could see the reserves dip below the $30bn threshold. 
  • The chart above shows that a foreign reserve below $30bn will put pressure on the naira, making it slip back above N400/$ in the parallel market.

Aviation Sector Stable amidst Challenges - THISDAY

JUNE 02, 2017

Although Nigerian airlines faced daunting challenges in the last two years of Muhammadu Buhari’s administration, there was some measure of stability in the sector despite the hiccups, writes Chinedu Eze

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There were two key incidents that defined the aviation sector in the last two years. One was the protracted scarcity of aviation fuel, known as Jet A1, which price rose as high as N280.00 per litre and the second was the resurfacing of the runway of the Nnamdi Azikiwe International Airport, Abuja, which forced the relocation of air operations in the capital city to Kaduna airport for six weeks.

While the rehabilitation of Abuja airport runway was a big plus for the Buhari administration; it received heavy knocks for the scarcity and high cost of aviation fuel.

 

But beyond what the administration could do or could not do, the domestic airlines lost over N2.3 billion during the peak Christmas season last year when hundreds of flights were cancelled at different airports in the country due to harmattan haze.

Forex Scarcity
The high price of aviation fuel was caused by the low value of the naira. As the dollar began to rise in value against the naira, prices of imported goods and services spiralled. This was what caused the scarcity and high price of aviation fuel. Marketers faced difficulty sources foreign exchange at lower price below the parallel market price to import the product.

The airlines faced further challenges because they could not source the scarce dollar to import spares, send their pilots to simulator training overseas and even take their aircraft overseas for routine maintenance checks.

But after a long outcry by the airlines to the federal government to give them access to FX, the Central Bank of Nigeria (CBN) created a special window for them and manufacturing concerns to access FX. But the modalities were still cumbersome and the airlines could not withstand the long wait as airline business is critical about time. An aircraft engine that suffered bird strike cannot wait for three months before the engine could be replaced and for the aircraft to become airborne again. The airline would suffer heavy financial losses and may not be able to meet its flight schedules and financial obligations when one aircraft is left as aircraft on ground (AOG).

In late 2016, the Managing Director and CEO of Medview Airline, Alhaji Muneer Bankole summed the CBN policy on FX to the airlines thus: “The CBN came out with a design which they call future, forward, spot; what it means is that you put your money for the next two months, three months, four months and you will be given allocation. In doing that you commit all your operational cash so everything has to cease until that two months; that is what it means. But we are hoping that things will improve. So when you look at the business of aviation it is all in dollars and I believe we are now looking at government to tell them what to do. Somebody right there needs to advise them to see aviation as a priority.”

Things really improved by 2017, when government began to supply dollars to ease the tension on the naira. But the airlines still faced problem sourcing the dollar at a good price.

Abuja Airport
When in March the federal government closed the nation’s busiest airport, the Nnamdi Azikiwe International Airport, Abuja for the repair of its runway, which had become a death trap, many Nigerians were not happy about it because they believed that there could be an alternative to closing the airport, as examples began to emanate where airport runways were rehabilitated while they were still in service.

The closure of the airport led to loss of economic activities in the Federal Capital Territory but the runway rehabilitation saved lives and improved the safety of flight operations to the capital city. Above all, what made the rehabilitation of the runway memorable was the fact that government delivered as promised. The Minister of State, Aviation, Senator Hadi Sirika kept to his promise and etched his promise that he would resign his job if the airport was not reopened at the targeted date in the memory of many Nigerians. The airport was closed on March 8 and reopened officially on April 19, 2017.

To prepare Kaduna airport as an alternative to Abuja for the six weeks the closure of the later would last, government had to upgrade many facilities at Kaduna airport at huge costs. That became a win-win situation because the obsolete facilities at the airport and uncompleted passenger terminal, which the six weeks relocation of Abuja flight operations facilitated their completion, was akin to killing two birds with one stone.

“It is no longer news that the federal government made considerable financial provision to ensure that the Kaduna airport was adequately prepared to play this alternate role including the provision of adequate aids and other relevant infrastructure that the airport did not have. The Minister of State, Aviation, who has been in the forefront of driving this difficult transition, met with initial challenges associated with the movement, but one after another, those challenges were dealt with appropriately in the last four weeks,” said an official of the Federal Airports Authority of Nigeria (FAAN).

Airport Terminals
In the last two years, the federal government has continued to work on the new terminals, which were started under the past administration, at the five international airports in the country, including Lagos, Kano, Port Harcourt, Abuja and Enugu and some of them are over 80 percent completed. In fact, almost all of them would be made operational before end of this year.
The government also introduced a policy mandating Aviation Security (AVSEC) of FAAN to carry arms in order to improve security at the airports. It also reinforced the policy on waiver of Customs duties on aircraft parts and efforts are being made to cut down the prices of aviation fuel despite the fact that the product is still being imported.

Arik Take Over
The major upheaval that has taken place in the aviation industry in the last two years was the takeover of Arik Air by the Asset Management Corporation of Nigeria (AMCON) for its failure to service its debts. Since after the takeover, the new management of the airline seems to be at crossroads about how to turn the airline around amid the challenges of paucity of funds and low passenger traffic occasioned by the current recession. The workers are also in a dilemma about tomorrow, while government is yet to make definite pronouncement on the future of the airline.

But the new management of the airline has brought back some of the aircraft in the fleet on AOG to operations, just as the workers who feared at the beginning of the takeover have continued to retain their jobs.

Airports Concessions
There are three cardinal things this government said it would achieve in aviation in the four-year tenure. One is establishing a national carrier; two is building Maintenance, Repair and Overhaul (MRO) facility and the third is concession major airports.
In the last two years, none of these set objectives had been accomplished. However, the government has initiated steps to actualise them through the establishment of transaction advisers. But government explained that the airports would remain underperforming with obsolete facilities until the private sector injects and modernises these airports.
The Minister of State, Aviation, Senator Sirika recently noted that concession might be the only choice government has now to modernise nation’s airports.

“I think the ultimate solution to all of these is to concession these airports. I have maintained this because I don’t know any other way we can go about it. That is the only way to go because government does not have the resources to continue to invest in these airports. We want to make sure that all the things at the Abuja airport are fixed and the airport returns to normal operation.
However, I think that the ultimate end and solution to all of these is the concession of these airports. I have maintained this. It is the only solution, I don’t know any other way we can do it because government no longer have the resources to continue to invest in these airports,” Sirika said.
However, many industry observers are sceptical about the actualisation of these goals, as no concrete action has been taken two years into the four years administration.

Questionable Appointments
The appointment of new directors for the Nigerian Civil Aviation Authority (NCAA) and the Federal Airports Authority of Nigeria (FAAN), early this year, had been greeted with severe criticism by the labour unions.
The unions excoriated government for appointing outsiders without experience to do jobs that would be effectively done some people in the industry who have better experience and knowledge of the sector.
But the government was earlier commended for appointing professionals in the industry to head the aviation agencies, including the Nigerian Airspace Management Agency (NAMA), the Accident Investigation Bureau (AIB), the College of Aviation Technology (NCAT), Zaria and the Nigeria Meteorological Agency (NIMET).

Funding Challenges
Reviewing the two years of the Buhari administration, a former Commandant of the Lagos airport and the Secretary of Aviation Round Table (ART), Group Captain John Ojikutu (retd) said: “It has opened the decays and the decadence in the sector which for too long have been shielded from the public view. We have come to know that a lot of the private operators have been living on bank loans and government intervention funds yet they remained in acute debts to the services providers. They get concession on Customs duties on aircraft importation and spares and on foreign exchange rate, yet they are indebted to banks, insurance, staff salaries in multiple arrears.
“In all these, they sell tickets on cash basis and not on credit; the question to ask is, what do these airlines do with their earnings?”

Ojikutu said in spite of the indebtedness of these airlines to the government services providers, and invariably the low revenue accrued to government, it has been able to sustain operations in the sector, noting that Abuja that accounts for about 35 percent of air and passengers traffic, whose runway that needed to have been repaired seven years ago was repaired within six weeks. Similarly, many navigational aids and runway approach aids that needed calibration and had exceeded their tolerance emergency were calibrated and have been kept serviceable to sustain operations.

Ojikutu however, did not talk about the high charges levelled on the airlines, the lack of airfield lighting in many airports, which force airlines to operate only six hours and the high cost of aviation fuel, but on airport concession he said: “My advice to government on this path is to concession only the non aeronautical facilities and infrastructure such as the passengers and cargo terminal buildings; aircraft aprons, car parks and toll gates.

“These have little concerns to the International Civil Aviation Organisation (ICAO). However, government must retain the aeronautical services and facilities including airport security. Others will include air traffic control and information services, runways and taxiways, perimeter and security fences, emergency and rescue services, etc. These are the concerns of ICAO and these are the State’s obligations to the Chicago convention in all its 19 Annexes.”

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WEEKAHEAD-Nigerian naira expected to be stable due to dollar flows - REUTERS

JUNE 02, 2017

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The Nigerian naira is expected to be stable in the coming week while the Zambian kwacha could come under pressure.

 

NIGERIA

The Nigerian naira is seen stable across the board in the near term on increased dollar supply to both the official interbank window and the black market.

It has been trading around 382 to the dollar on the black market in the last two weeks, while at the interbank market the naira was trading at around 305.40 per dollar.

The central bank has been intervening on the official market to try to narrow the spread between the official interbank and black markets. It has sold over $4 billion since February, improving dollar supply and providing support for the naira.

 

KENYA

The Kenyan shilling could gain ground against the dollar in the coming week with dwindling end month importer demand giving way to foreign exchange inflows from charities and exporters, traders said.

At 0850 GMT on Wednesday, commercial banks quoted the shilling at 103.35/45 per dollar, compared with 103.25/45 at last Thursday's close. Thursday was a public holiday.

"End of month demand is taking it's course, I expect it to gain maybe slightly," said a trader from a commercial bank.

 

ZAMBIA

The Zambian kwacha is likely to come under pressure in the coming week due to increasing demand for dollars from importers at the start of the new month.

At 0740 GMT on Thursday, commercial banks quoted the currency at 9.2500 per dollar, stronger than 9.3300 a week ago.

"Dollar supply continues to wane while demand persists. Higher levels will attract exporters to provide resistance," one senior commercial bank trader said.

 

UGANDA

The Ugandan shilling is seen posting marginal gains in the coming week, boosted by flagging appetite for hard currency as commercial banks stay on the sidelines ahead of 2017/18 fiscal year budget reading.

At 1100 GMT, commercial banks quoted the shilling on 3,590/3,600, stronger than last Thursday's close of 3,600/3,610.

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"In the days ahead of the budget players tend to go slow on taking positions and this is what we're likely to see," said a trader at a leading commercial bank.

The budget for the next July-June fiscal year is due to be read on June 8.

 

GHANA

Ghana's cedi is seen stable next week on expected offshore portfolio inflows on the heels of a three-year local bond and central bank dollar sales, traders said.

The local unit, which has been fairly stable most part of the year, weakened 2.8 percent in the month of May on a mid-month corporate dollar demand surge. It was trading at 4.3275 to the greenback by mid-morning on Thursday, compared with 4.3200 a month ago.

"We see a bullish outlook for the cedi in the days ahead as we expect portfolio inflows and central bank support to offer the currency some stability," analyst Joseph Biggles Amponsah of Accra-based Dortis Research said.

 

TANZANIA

The Tanzanian shilling could come under pressure in the coming days due to demand for hard currency from the oil sector. Commercial banks quoted the shilling at 2,238/2,243 to the dollar on Thursday from 2,234/2,244 a week ago. "There is pressure on the local currency coming from the oil sector, despite month-end dollar inflows from corporates. The shilling could trade in a tight range next week," said a trader at CRDB Bank. (Reporting by Oludare Mayowa, John Ndiso, Chris Mfula, Elias Biryabarema, Kwasi Kpodo and Fumbuka Ng'wanakilala Editing by Jeremy Gaunt)

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UPDATE 3-Oil prices drop amid glut concerns, U.S. withdrawal from climate deal - REUTERS

JUNE 02, 2017

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* U.S. President Trump says to walk away from Paris climate accord

* That could spark "drilling free for all" in the U.S. - analyst

* Rising U.S. output has been blunting OPEC efforts to clear glut

* Market can stabilise if all producers cut output - Rosneft CEO (Adds Russia's Rosneft CEO comments, updates prices)

By Jane Chung

SEOUL, June 2 (Reuters) - Oil prices tumbled below $50 on Friday amid worries that U.S. President Donald Trump's decision to abandon a global climate pact could spark more crude drilling in the United States, stoking a persistent glut in global supply.

Global benchmark Brent crude futures was down 1.7 percent, or 80 cents, at $49.75 a barrel, as of 0725 GMT.

U.S. West Texas Intermediate crude futures dropped 87 cents, or 1.81 percent, to $47.46 per barrel.

Commodity markets were absorbing news the United States would withdraw from the landmark 2015 global agreement to fight climate change, a move that fulfilled a major campaign pledge but drew condemnation from U.S. allies.

"This could lead to a drilling free-for-all in the U.S. and also see other signatories waver in their commitments," said Jeffrey Halley, senior market analyst, OANDA.

"This outcome could increase the supply-side equation from the United States and complicate OPEC's forward projections. A scenario that would not be favourable to oil prices."

Surging U.S. production has put a strain on OPEC members' efforts to curb production to drain a global crude supply overhang.

A week ago, the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC members met in Vienna to roll over an output cut deal to reduce 1.8 million barrels per day (bpd) until the end of next March.

Russian Deputy Prime Minister Arkady Dvorkovich said on Friday he did not think that the global output cut agreement would be altered should prices go lower.

Russia's Rosneft CEO Igor Sechin also said the market cannot stabilise unless all producers cut output.

Oil prices are down some 7.5 percent since OPEC's May 25 decision to extend the cuts.

Faced with lingering glut woes, the oil cartel also discussed last week reducing output by a further 1 to 1.5 percent, and could revisit the proposal should inventories remain high, according to sources.

But oil markets were offered some support by official data that showed crude inventories in the United States, the world's top oil consumer, fell sharply last week as refining and exports surged to record highs.

Crude stockpiles were down by 6.4 million barrels in the week to May 26, beating analyst expectations for a decrease of 2.5 million barrels.

However, U.S. crude production rose to 9.34 million bpd last week, up nearly 500,000 bpd from a year ago.

"We may or may not see more huge draws. But crude production is slowly but surely going to neutralize the (OPEC-led)production cut," said Sukrit Vijayakar, director of energy consultancy Trifecta.

Rising output from Nigeria and Libya, which are exempted from the deal, is also undercutting oil producers' attempt to limit production. (Reporting by Jane Chung; Additional reporting by Jessica Jaganathan and Henning Gloystein in SINGAPORE; Editing by Joseph Radford and Sherry Jacob-Phillips)

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Oil prices slide nearly 1 pct on persistent glut concerns - REUTERS

JUNE 02, 2017

By Jane Chung

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SEOUL, June 2 (Reuters) - Oil prices dropped nearly 1 percent in early Asian trade on Friday, dragged down by ongoing concerns over a global glut in crude supply despite a bigger-than-expected draw in U.S. crude inventories.

Global benchmark Brent crude futures were down 39 cents, or 0.77 percent, at $50.25 a barrel at 0039 GMT.

U.S. West Texas Intermediate crude futures dropped 45 cents, or 0.93 percent, to $47.91 per barrel.

Official data showed crude inventories in the United States, the world's top oil consumer, fell sharply last week as refining and exports surged to record highs.

Crude stockpiles were down to 6.4 million barrels in the week to May 26, beating analyst expectations for a decrease of 2.5 million barrels.

Although a sharp fall of U.S. crude inventories could be seen as a supportive factor to oil prices, U.S. crude production rose to 9.35 million bpd last week, up nearly 500,000 bpd from a year ago.

Surging U.S. production has put a strain on OPEC members' efforts to curb production cuts in a bid to drain a global crude supply overhang and to prop up prices.

A week ago, the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC members met in Vienna to roll over the output cut deal to reduce 1.8 million barrels per day (bpd) until the end of next March.

Faced with lingering glut woes, the oil cartel discussed last week reducing output by a further 1 to 1.5 percent, and could revisit the proposal should inventories remain high, according to sources.

Rising output from Nigeria and Libya is further undercutting the oil producers' attempt to limit oil production. Nigeria and Libya are exempted from curbing output as they seek to restore supplies hurt by internal conflicts.

Libya's oil production has risen to 827,000 bpd after technical problems were resolved at the Sharara field. That was above a three-year peak of 800,000 bpd reached earlier in May.

Some commodity markets were also absorbing news that President Donald Trump said he would withdraw the United States from the landmark 2015 global agreement to fight climate change, a move that fulfilled a major campaign pledge but drew condemnation from U.S. allies and business leaders.

But Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance, said the U.S. decision to walk away from the climate agreement was not likely to impact oil markets.

“I see the little connection between oil markets and the Paris accord," Barratt said.

"I think the market is looking for swing factors like an increase in demand from China,” he said.

(Reporting by Jane Chung; Editing by Joseph Radford)

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Foreign participation in Egypt T-bill auctions at $368 mln -finance ministry - REUTERS

JUNE 02, 2017

CAIRO, June 1 (Reuters) - Foreign participation in Egypt's Thursday treasury bill auctions amounted to 6.6 billion Egyptian pounds ($368 million), the head of public debt at the Finance Ministry, Sami Khallaf, told Reuters.

Egypt on Thursday auctioned six-month and one-year treasury bills.

($1 = 17.9500 Egyptian pounds) (Reporting by Eric Knecht; Editing by Ahmed Aboulenein)

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Pound to US Dollar Poised to Sell Off Over Next Five Days - PSL

MAY 15, 2017

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  • Written by Joaquin Monfort

GBP/USD rose to within a hair's breadth of the psychologically significant 1.3000 level before rolling over last week and given price action so far, this may be the precursor to a deeper sell off in the coming week.

The pair has formed a topping pattern clearly visible on the four-hour chart, which suggests a strong possibility of further downside.

The pattern is probably what is known amongst technicians as an ending diagonal.

These occur at the end of uptrends and often signal an imminent and strong sell-off in the pair and a reversal of the trend on a higher timeframe.

Below is an idealized image of an ending diagonal and a ‘real’ ending diagonal on EUR/USD as well as the sell-off which followed.

GBPUSDMay14diagideal

GBPUSDMay14diag

These images look very similar to the ending diagonal which appears to be forming on GBP/USD.

The pattern on GBP/USD shows a truncated or incomplete wave 4 – and therefore is not ideal – however some license is allowed in identification.

GBPUSDMay14

The exchange rate has already broken below the lower borderline of the pattern before recovering back up to it.

This is probably what is known as a ‘throwback’, which is the move back to a trendline or pattern border immediately after a breakout has occurred.

These moves almost always result in a resumption direction of the breakout after the exchange rate has said its ‘final goodbye’ or ‘air kiss goodbye’ as it is often referred to by traders, to the trend or borderline.

These are optimum entry points for traders seeking the alchemy of low risk – high reward.

The breakdown and throwback suggests a continuation lower in the week ahead.

The MACD is also very bearishly aligned and now below the zeroline which indicates a change of trend in the traditional interpretation of the indicator, as expressed by its originator Gerald Appel.

We have taken the height of the pattern at its widest point (a) to calculate the potential downside (b), in a method similar to forecasting the extent of a triangle’s breakout.

This appears to forecast a target at around 1.2760, where support kicks in from the monthly pivot.

For confirmation of more downside, however, we would first want to see a break below the 1.2845 lows.

Data for the Dollar

It is a relatively quiet week ahead on the hard data front for the US Dollar.

Building Permits are the first tier-one release and are scheduled to come out on Tuesday, May 16 at 13.30 (BST).

They are expected to show a rise to 1.27m in April.

Housing data has generally been strong lately, suggesting a more upside.

Housing Starts, out at the same time, are forecast to show a rise of 1.26m from a previous result of 1.215m.

The next big release is the Philadelphia Fed Manufacturing Index, out on Thursday at 13.30 which is expected to show a decline to 19.8 from 22.00 previously.

Other data of note is New York Manufacturing, out at 13.30 on Monday and Net flows of financial investments (Net TIC flows) at 21.00, which is forecast to show a rising surplus of inflows into USD.

The Dollar is at risk of downside as expectations of 2 or even 3 hikes in 2017 have started to shift from the reality of slightly below expectations data releases.

“There’s a serious misalignment between U.S. data, market expectations and Fed speak. Friday’s U.S. economic reports raise questions about the possibility of a rate hike in June,” said Kathy Lien in her week ahead report.

Data for the Pound

Retails Sales, on Thursday, May 18 at 9.30 (BST) will probably be the most significant release in the week ahead as it covers the UK economy’s current weak spot.

Consumer spending has slowed in the first quarter as the weak pound has put pushed up the price of many imports leading shoppers to limit the size of their baskets.

This slowdown in the high street is a major concern as if it continues it will depress economic growth significantly given that it accounts for the largest proportion of GDP.

Slower growth will lessen even further the likelihood of the Bank of England (BOE) bringing forward the time when they will raise interest rates.

Given relatively higher interest rates tend to attract more capital flows which increase demand for a currency the pound stands to lose out if the BOE adopt a more dovish tone – which by dovish means more inclined to cut rather than raise interest rates.

Inflation data, on Tuesday, May 16 at  9.30 is the other major release for the currency, as it too could impact on rate setting.

Headline CPI is expected to show a 2.6% rise compared to April last year and 0.4% on a monthly basis.

Unemployment and Earnings data are out on Wednesday at 9.30 and are forecast to show earnings rise by 2.4% compared to March 2016 whilst the unemployment rate is expected to remain unchanged at 4.7%.

The change in those seeking unemployment benefits, meanwhile, is expected to show a rise of 5k in April.

All three of these releases could impact heavily on sterling if they come out very different from expectations, with Kathy Lien of BK asset management, for one, seeing an upside bias to the releases:

“We expect most of these reports to surprise to the upside, particularly the labor data as the PMIs report some of the strongest conditions in the labor market this year,” said Lien. 

FG, regulators need proactive measures to attract diversified investors – VANGUARD

MAY 15, 2017

The Managing Director and Chief Executive Officer of Solid -Rock Securities and Investment Plc, Mr. Patrick Ezeagu, in this interview spoke on what regulators and the government can do to attract diversified investors to boost the Nigerian capital market.  

By Peter Egwuatu

 

WHAT kind of actions would you like the regulators to adopt that can attract investors to the market?

If the Federal Government remains committed to the financing of infrastructure deficit; this can done through the capital market. One of the major challenges businesses are facing is poor infrastructure which consume a large chunk of their revenues. The Federal Government should ensure that the capital expenditure of the 2017 budget is dedicated to improving infrastructure to enhance the ease of doing business in the country and for businesses to become productive and move towards economic recovery.

In addition, a time has come when the federal Government should involve the capital market regulators and operators in the build -up to budgetary processes and procedures in view of the pivotal role of the market to the  growth and development of the economy.

The market is  a reservoir of cheap and long term funds which is required for long term development of any nation. The capital market serves as a buffer zone for the government to finance budget deficit and there is a correlation between the development of the economy and its capital market. 

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Managing Director and Chief Executive Officer of Solid -Rock Securities and Investment Plc, Mr. Patrick Ezeagu

What are the effects of high exchange rate and inflation rate on investment in the stock market?

High exchange rate and inflation are the twin evils that afflict the capital market and indeed every economic endeavour. For a start, these two variables introduce a high level of uncertainty to the price structures of the market. Secondly, they stifle savings which is the fulcrum of investment. Any phenomenon that negatively impacts on savings reduces the quantum of available investible fund for Capital Market investment. Thirdly, it hits the foreign portfolio investors as they face Exchange rate risk with their investment, especially,  with respect to repatriation of dividend or capital or both.

As a result, one of the main reasons why our capital market has been witnessing low patronage is attributable to the impact of both inflation and the uncomfortable high exchange rate regime. However, I am glad that the CBN is coming to terms with the need to free the strangulating hold it has on the rate to enable the Naira find its market determined exchange rate with the other currencies.

In this way, both investors in the capital market and other users of FX can be relatively assured of a band within which they can benchmark their exchange rate. The flip side is that inflation shall also be contained in the process as the economy and particularly the capital market inches towards a full free market determined price structures.

How can the governments at all tiers utilize the Capital Market to finance the economy?

Government at all levels utilizes the Capital Market to finance the economy because it provides an alternative source of funding that can complement Internally Generated Revenue (IGR). Capital Market fund is relatively cheaper than any other means of funding and has a longer maturity period.

There are various investments/windows available to both Federal and States governments in accessing funding from the market, these include asset sale, bond issuance such as Sovereign, Sub-national, green bonds, etc. These debt instruments are available and governments at various tiers are at liberty to fund infrastructural development using either or a combination of these types of instruments.

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Euro zone recovery, Macron win give ECB chance to consider unwinding policy - BLOOMBERG

MAY 15, 2017

May 13 An economic recovery and robust outlook in the euro zone mean the European Central Bank may be able to look at normalising its ultra-loose monetary policy, German Bundesbank President Jens Weidmann said on Saturday.

Weidmann, one of the most conservative ECB policymakers, said the election of Emmanuel Macron as French president should give the single currency bloc an additional economic boost.

"The strengthening economic development in the euro zone and the robust outlook make a normalisation (of monetary policy) conceivable," Weidmann said at a meeting of the financial leaders of seven leading world economies in Bari, Italy.

But he said a rise in inflation should become more sustainable before the ECB considers such a move.

He added Macron's victory in France's presidential election should help boost growth in the euro zone. Macron won on a platform of reforming France and a business-friendly vision of European integration.

"The election victory of Macron gives a chance that the euro zone economy gets an additional momentum," Weidmann said. (Reporting by Gernot Heller; Writing by Joseph Nasr; Editing by Mark Potter)

Euro zone recovery, Macron win give ECB chance to consider unwinding policy - BLOOMBERG

MAY 15, 2017

BY Alexandria Arnold and Dennis Pettit

 

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  • Friday drop halves dollar’s weekly gain; euro retakes 1.0900

  • Treasury yields near lows for the week as rate-hike bets pared

The dollar fell for a third day after April U.S. retail sales and consumer price data missed estimates, paring its first weekly gain since the start of last month.

The greenback shed modest early gains to trade lower by 0.3 percent. Friday’s dollar drop breached technical support at the 200-DMA for the Bloomberg dollar index, opening the risk of further declines. The dollar fell versus most of its G-10 peers, losing the most against the Swiss franc, which saw broad gains late in the European session.

  • USD/CHF fell as much as 0.9% to below 1.0000, its steepest decline in three weeks, as the CHF advanced vs all of its G-10 peers. CHF gain came amid very muted flows, appeared to be position-driven rather than headline-driven, a trader in London said; position unwinds likely due to inability of EUR/CHF to add gains after a report that the ECB could begin signaling a policy shift around mid-year caught players wrong-footed, the trader said
  • EUR/USD rose to a fresh session high at 1.0934 following the data and remained close by after eclipsing the overnight high at 1.0878. Offers to sell EUR are stacked from 1.0925 to 1.0950, the high of a range that prevailed in the run-up to the French presidential election. The euro is expected to find further offers around 1.1000 and likely near the Monday high at 1.1023 that was seen in Asian trading as the French election outcome became clear
  • ECB’s Praet and Angeloni speak on Monday; traders will watch to see if there is any pushback from the ECB officials to the report on policy signaling. ECB’s Constancio reiterated Thursday that the bank’s policy path is set until year-end though signaling of future steps could begin in the fall
  • USD/JPY is trading ~113.43 after reaching a session low of 113.20. The USD was undercut by a decline in Treasury yields that came as traders pared back bets for a June rate hike after the CPI miss. Stop-loss sell orders were triggered below 113.50, said a trader in London familiar with the transactions who asked not to be identified because not authorized to speak publicly
  • Traders parsed remarks from Fed officials to see whether Friday’s economic reports may have caused a shift in sentiment amid still-high market expectations for a June rate rise. Chicago Fed President Charles Evans said that his view is that downside risks to inflation “still predominate,” though the U.S. is probably at full employment. Philadelphia Fed President Patrick Harker, also a voter this year on the FOMC, said he sees “very little slack” left in the U.S. labor market
  • April retail sales rose 0.4% overall vs estimates for a gain of 0.6% and with an upward revision to the prior month offsetting the miss. At the same time, April CPI rose 0.2% overall, matching estimates, though the ex-food and energy component rose only 0.1% vs estimates for a gain of 0.2%. The dollar was little moved by UofMich sentiment at 97.7 vs est. 97.0

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