South Africa's rand under pressure despite trade surplus

South Africa's rand weakened against the dollar on Friday, as a larger than expected trade surplus for December failed to offset the selling pressure on emerging currencies as investors brace for policy tightening in the United States.

 

The local unit surrendered gains made the previous day after South Africa's own central bank kept domestic rates unchanged and moved to dampen market expectations of a rate cut this year prompted by a sharp drop in oil prices.

At 1553 GMT the rand traded 0.53 percent softer at 11.6150 to the greenback compared with where it ended the New York session on Thursday.

Government bonds also edged lower, and the yield on the 2026 benchmark inversely ticked up half a basis point to 7.135 percent.

The rand weakened even after data from the revenue service showed South recorded a trade surplus of 6.85 billion rand in December after a revised 5.27 billion rand shortfall in November.

Nigeria's foreign investors hoping for post-election naira devaluation

 

Tumbling oil prices and political chaos have eroded Nigeria's lure for foreign investors, but they are likely to venture back if authorities will allow what some say is a much-needed currency devaluation.

The price of oil -- the source of 70 percent of Nigeria government revenue -- has fallen 60 percent since last June, pushing stocks down by a third over the same period. Local bond yields are 2 percentage points higher.

Adding to the pressure are almost daily attacks by the Islamist militants Boko Haram and political uncertainty as the country faces a closely fought election on Feb. 14.

The naira's 20 percent depreciation in the past year has further eroded the dollar value of foreign funds' holdings. But the depreciation has not gone far enough, investors say. Some reckon the currency must fall another 10 to 15 percent to reach fair value.

Malek Bou-Diab, a portfolio manager at Bellevue Fund's pan-African equities fund with $110 million under management, for instance, wants to see a devaluation of at least 10 percent before considering adding to his Nigeria holdings.

Foreign investors such as Bou-Diab pulled almost $1 billion out of Nigerian equities in the first 11 months of 2014, stock market data show. Along with the index's 32 percent fall in the past year, that has made share valuations cheap, but he is not tempted yet.

"For the short term, I understand the argument of low valuation. Yes, it is more attractive than it was -- but does it really price in the risk?," Bou-Diab said.

Investors believe that despite its decline, the naira remains expensive after more than a decade of booming oil prices.

REUTERS

Ugandan shilling seen receiving support from hard currency inflows

 The Ugandan shilling was stable on Friday but was expected to gain on the back of hard currency inflows from foreign investors attracted by rising yields on government debt.

At 1133 GMT commercial banks quoted the shilling at 2,863/2,873, little changed from Thursday's close of 2,860/2,870.

David Bagambe, trader at Diamond Trust Bank, said there was limited dollar demand from banks and companies.

Rates on Ugandan debt instruments have been climbing in recent months on worries government spending will likely escalate ahead of general elections due early next year.

At this week's Treasury bond auction, the weighted average yield on the two year notes rose to 16.175 percent from 14.322 percent at their last sale on Dec. 3.

Rates on the ten-year bonds jumped to 17.019 percent from 14.770 percent when they were last sold on November 5.

Bagambe said in recent days the central bank or Bank of Uganda (BoU), wary of exacerbating pressure on the shilling, had not been conducting their daily hard currency purchases.

BoU buys about $5 million daily to build its foreign reserves.

Nigeria's foreign reserves fall to $34.38 bln

Nigeria's foreign exchange reserves fell to $34.38 billion by Jan. 28, down 20.3 percent from $43.16 billion a year earlier, owing to draw-downs by the central bank of Nigeria to defend the local currency, the naira.

Data from the central bank on Friday showed the reserves of the economy have steadily declined, falling
0.43 percent month-on-month from December, when they stood at $34.53 billion.

The naira has remained under pressure, trading outside the central bank's target band of 160-176 to the dollar as oil prices plunge. This is despite a devaluation meant to find the currency's true value and shore up Nigeria's foreign reserves.

Naira Depreciation Could Trigger Inflation

 The National Bureau of Statistic (NBS) says contrary to widespread speculations that increased pressures on prices could result from the election period, inflation could actually be caused by the recent depreciation of the Naira.

It said a review of historical time series in the current democratic dispensation showed little evidence that inflation could be influenced, to a large extent by election activities.

The NBS, in its 2014 Economic Review and 2015-2017 Outlook also said it expected the Nigerian economy to grow by 5.5 percent in 2015 helped by the non-oil sector, which is expected to drive growth.

It added that growth is expected to average 5.7 per cent in 2015 through 2017.

The statistical agency also projected inflation at 8.8 per cent in 2015 and expects it to remain moderately stable averaging 8.13 per cent over the 2015 to 2017 period.

The NBS said the impact of declining crude oil prices was likely to result in a decline in the value of oil exports, over the forecast period, although exports are expected to be positive in the near term.

Nigerian naira firms 1.1 pct at N187 after central bank sells dollars

 

Nigeria's naira gained 1.1 percent against the dollar on Friday, lifted by the central bank's intervention and dollar sales by oil companies this week, which helped ease demand pressure on the local currency, dealers said.


The local unit firmed to close at 187.50 naira to the dollar following the intervention, after opening at 189.55. The naira closed at 189.10 on Thursday.

The central bank has been selling dollars since this week and intervened again on Friday to lift the naira, which is trading outside its target band of 160-176 and has hit record lows this year as the price of oil, Nigeria's main export, fell.

The bank sold an undisclosed amount of dollars to prop up the local currency, dealers said.
This week, state-oil firm NNPC sold around $350 million while Royal Dutch Shell sold an undisclosed amount of dollars, to buy naira for local use, boosting interbank dollar liquidity.

Over the last year, the central bank has burned through 20 percent of its reserves, $28 million a day, in defence of a currency that has remained under unrelenting pressure because of a basic lack of petro-dollars.
By end-January, reserves stood at $34.38 billion.

The naira hovered around 189-191 to the greenback in the past week, before oil companies sold dollars for their operations and the central bank intervened to support the local currency.

Nigeria: Analysts Predict Naira Devaluation to N215/U.S.Dollar

Analysts have predicted that the naira will be further devalued to N215 per dollar saying the current official exchange rate does not reflect the fair value of the currency.

Also, analyst at Ecobank said, "Given recent developments domestically, and within an environment of lower oil prices and sustained strengthening of the dollar, it is possible that the Central Bank of Nigeria could be forced to raise interest rates shortly and/or devalue the naira once again.

Mixed naira performance

Meanwhile the naira recorded mixed performance from Monday to yesterday at the interbank and parallel market. At the interbank market, the naira depreciated by N1.92 kobo, as the interbank exchange rate rose to N192 yesterday from N190.18 last week.

At the parallel market, the naira appreciated by N4, as the parallel market exchange rate dropped to N204 yesterday from N208 last week due to the 100 percent increase in weekly dollar sales to bureaux de change (BDCs) by the Central Bank of Nigeria (CBN). From N15,000 per week per BDC, the CBN increased it to $30,000, in a bid to boost supply and halt the depreciation of the naira at the parallel market.

On November 24th 2014, the CBN devalued the naira by 8.3 percent, moving the midpoint of the official exchange rate to N168 per dollar from N155. In addition the apex bank introduced series of measures to stem the persistent depreciation of the naira in the interbank and parallel markets. According to FDC Analysts, "These measures have had little or no effect in dousing the severe attack on the currency. JP Morgan's move of putting Nigeria on negative watch spurred a run on the currency which prompted an immediate intervention by the CBN.

We expect a minimum of a three to five (3-5) percent further devaluation in the currency. Since the Monetary Policy Committee (MPC) did not make any adjustments in its January meeting, citing the need to allow the changes made in November to manifestin the earliest possible time. For the committee to react will be at the next meeting in March." The CBN will continue to intervene in the markets to keep the naira afloat, at the detriment of the external reserves.

Bank of America Merrill Lynch (BofAML) is of the opinion that the necessary policy actions 200bps rate hike and naira devaluation) will not be taken until after the February elections. The bank is projecting that the naira will trade at an average of N202 in 2015."

US crude falls below $44, lowest since April 2009

U.S. crude futures dipped below $44 per barrel on Thursday, touching a level last hit in April 2009.

At 10:52 a.m. EDT, U.S. crude was trading at $43.76 a barrel, down 69 cents.

Brent oil futures softened after traded near $49 a barrel on Thursday as speculator buying on hopes for a price rebound offset data showing record-high U.S. crude stocks. Brent last traded at $48.64, up 17 cents.

Both futures contracts were initially boosted by encouraging U.S. initial jobless claims data, which has dipped to the lowest level in nearly 15 years. This cemented investor views that the U.S. economic recovery was gathering strength and demand for oil products would rise.

The numbers offset Wednesday's bearish supply data from the U.S. Energy Information Administration (EIA) showing that domestic crude stocks had risen by almost 9 million barrels week-on-week to nearly 407 million, the highest level since the government began keeping such records in 1982.

That pushed U.S. crude to an intraday low of $44.08, the weakest since April 2009, but Brent held up relatively well.

Nigerian naira falls sharply against dollar

Nigerian naira fell sharply against the dollar, shortly after the forex market opened on Thursday, a day after the interbank market soaked up a large dollar sale by the state-oil company.

The unit opened at 189.30 naira to the dollar and quickly fell 1.56 percent to 192.30 by 0841 GMT. The naira closed at 186 on Wednesday.

State-oil company NNPC on Wednesday sold around $350 million to some lenders, boosting interbank market dollar liquidity.

Nigeria's banks flex muscles in tussle for control of naira

 REPORT FROM REUTERS: Wrapping up a monetary policy speech last week, Nigerian central bank governor Godwin Emefiele declared that the naira, which has crumpled to 190 to the dollar with the drop in oil prices, was "appropriately priced".

However, when currency dealers in Lagos and other financial centres in Africa and Europe got to work the next morning and turned on their computers, many were surprised to find the naira wasn't priced at all, let alone "appropriately".

Instead, as they stared at their screens, for three hours traders were presented with blank spaces where normally they see the 'bids' and 'offers' that determine the market price of the currency of Africa's biggest oil producer and largest economy.

Rather than a computer glitch or power outage -- common hiccups in any frontier market -- the lack of prices was deliberate: all Nigeria's banks were refusing to trade while their top dealers met behind closed doors to chew over Emefiele's pronouncements, according to those involved.

Among the decisions reached by the Financial Markets Dealers Association (FMDA), as the club of 40 banks, discount houses and brokerages is known, was an unofficial 'circuit-break' agreement to halt trade if the naira fell more than 2 percent in a day.

FMDA chief executive Wale Abe insisted no central bank officials were present at Wednesday's meeting and said it was an entirely voluntary measure to curb volatility, in line with the body's support for financial market stability and maturity.

However, the impromptu trading interruption runs counter to that objective, while the seemingly ad hoc decisions from a collective of rival banks raise questions about transparency, with some analysts suspecting hidden central bank regulation.

Food Packaging: EU Commits 12 Million Euros to National Quality Infrastructure Project in Nigeria

The European Union says it has committed 12 Million Euros for the establishment of the National Quality Infrastructure project in the country.

Disclosing this at the inauguration of the inter-ministerial committee on food safety, in Abuja, Chief technical Adviser on NQI and representative of the United Nations Industrial Development Organization, UNIDO, Mr Charles Malata, said the project will enable food processed in the country to meet best practices and attract the international investors to Nigeria.

Malata added that that the project will further reduce food wastage in Nigeria.

The project is supported by the EU, UNIDO in collaboration with the Ministries of Agriculture, Trade and Investment, Science and Technology, Health as well as Environment. Agencies like NAFDAC, MAN, SON among others are also involved in the project.

Why We Fixed Petrol At N87 Per Litre - PPPRA

The Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Mr. Farouk Ahmed, has clarified that the price of crude oil dropped to a point where the open market price of petrol also fell to a level government considered appropriate to relieve some of the burdens imposed on Nigerians by the knock-on effect of the dwindling price of crude oil on the economy.

According to him, the price of crude oil averaged $62 in December 2014 and dropped to an average of $50 per barrel for the first half of January 2015.

It was after a consistent and diligent monitoring of the trend, since the beginning of the current drop in crude oil price that government was able to confirm its ability to reduce the pump price of gasoline, commensurate with the amount announced.

A press statement from the PPPRA said Mr. Farouk explained in Abuja at a press briefing that even at the lowest crude oil price of $47.23 recorded on January 16, 2015, the open market price of petrol was about the same as the erstwhile price of N97/litre.

Farouk maintained that with the current pump price of N87 per litre recently announced, government is still subsidizing the pump price of petrol in favour of consumers.

Nigeria to become Africa’s largest fertiliser producer by 2018 – official

The Group Executive Director, Gas and Power, of the state-run Nigerian National Petroleum Corporation (NNPC), Dr. David Ige, has said that the full implementation of the gas master plan may position Nigeria as the largest producer of fertilizer in Africa by 2018. Besides, Nigeria has grown its gas supply market from 300 million to 2 billion cubic feet per day (cfpd).

Nigeria’s Guardian newspaper report on Tuesday said that Ige told journalists, in Abuja that the Nigerian gas master plan would increase the country’s earning from gas resources.

Ige attributed the increase in gas supply to successful implementation of the gas master plan and described the plan as a policy document that has basically outlined government’s aspiration for the commodity.

According to him, the implementation has already positioned Nigeria to be the largest producer of fertiliser by 2018 on the continent.

He noted that the policy has impacted positively on the sector and that everything that is outlined in it is being implemented to the letter.

Nigeria: SEC Okays Access Bank's N52.6 Billion Rights Issue

Access Bank Plc has secured approval of the Securities and Exchange Commission (SEC) to proceed with plans to raise N52.6 billion in a share sale as it pursues expansion and stronger cash reserves.

Access Bank Plc, with operations in eight other countries, will be selling shares to existing shareholders by way of Rights Issue of 7,627,639,636 shares of 50 kobo each at N6.90. Shareholders of the Bank had approved the Board of Directors' proposal to raise additional equity at an Extra Ordinary Meeting (EGM) held in Lagos on October 13, 2014.

The capital raising falls in line with Access Bank's five-year corporate strategy plan to be one of the top three banks in the country and the "world's most respected African bank". This will be anchored on four critical pillars - capital, human capital, governance and risk management. It will also enable the Bank to be more competitive and meet the funding needs of its blue chip customers that meet its credit risk criteria.

Group Managing Director/Chief Executive Officer, Access Bank Plc, Herbert Wigwe said the proceeds from the offer will be used to upgrade the Bank's information technology platforms to enable it provide better services, upgrade the Bank's branch networks and further improve the working environment.

Angola plans to cut 2015 budget oil price to $40/bbl

 Angola's cabinet has asked parliament to revise down the oil price assumption in the 2015 budget to $40 per barrel from its earlier projection of $81 per barrel, due to tumbling crude prices, the finance ministry said.

The oil price assumption cut would slash $14 billion from the budget, said a statement by the finance ministry seen by Reuters on Monday.

The national assembly has until the end of next month to approve the changes, the ministry said.

Nigeria's Access Bank starts marketing 52.6 bln naira rights issue

Nigeria's Access Bank will start marketing a rights issue on Monday aiming to raise 52.6 billion naira ($275.10 million) to invest in infrastructure and boost lending.

According to marketing documents seen by Reuters, the lender will sell 7.63 billion ordinary shares at 6.90 naira each at a ratio of one new share for every three held by existing shareholders.

The issue will close on March 4 and the new shares will be listed on the Nigerian Stock Exchange for trading on June 1, the bank said

Naira closes at record low, despite intervention

 Nigeria's naira ended at a record closing low on Monday, despite central bank intervention, as the currency continued to weaken on strong demand for the greenback, dealers said.



The unit closed at 191.10, a new record low against the U.S. dollar, compared with Friday's record low close of 190.60 naira. One dealer traded the naira at a one-off rate of 194.10 during mid-day session.

The currency had initially gained 1.66 percent to 186.80 naira after the central bank and two oil companies sold dollars to lift the naira, before it then slipped into negative territory.

The naira has hit a string of record lows as dollar liquidity on the interbank forex market thins out amidst a collapse in the price of oil, Nigeria's main export.

Dealers said Total offered to sell $80 million to some lenders on Monday while Shell sold an undisclosed amount of dollars, to buy naira for their local operations.

 

Nigeria's Forcados oil pipeline resumes after one-week shutdown

Nigeria resumed operations on its Trans Forcados oil pipeline, a senior oil official said on Monday, bringing back on stream part of the network whose closure also led to a near halving of the country's gas production.

David Ige, executive director of gas and power at Nigerian National Petroleum Corp, told Reuters that the pipeline, which had been shut for a week due to sabotage, resumed on Saturday afternoon. 

It transports the Forcados crude oil grade in the delta region and was scheduled to export about 260,000 barrels per day in January and 210,000 bpd in February.

The west African crude market is already oversupplied, so the resumption had little immediate impact on prices.

The outage also halted a significant part of Nigeria's natural gas production. Gas fields had to be shut down because the condensate they produce alongside the gas is normally evacuated via Forcados.

Investor education key to Market Development – SEC DG

Acting Director General of the Securities and Exchange Commission (SEC) Mournir Gwarzo has again emphasized on investors’ education both for retail and institutional to develop the market and improve the level of investment from the domestic side in the country. 

Gwarzo who spoke in Abuja when he received members of the Fund Managers Association of Nigeria (FMAN) Monday, disclosed that one of the strategies of the new management is to embark on huge public enlightenment programme with other stakeholders to educate the investing public.

Michael Adebola, President of Fund Managers Association of Nigeria (FMAN) disclosed that Nigerians need to have a lot of understanding about what mutual funds is all about adding that the enlightenment will assist to boost the industry.

He promised that the association would work with the SEC on enlightenment of the investing public which he believes would translate into a bigger fund market in the country.