The Nigerian currency, Naira continues to gain more weight in the unofficial foreign exchange market, as it was quoted at N216 to the dollar on Monday.
This was a sharp rise from 240 a week ago.
The massive gains are being linked to the rejection by the commercial banks of dollar and pound sterling deposits in domiciliary accounts.
The naira closed at 225 on the parallel market on Friday, traders said. On the official interbank market, it traded near the central bank’s pegged rate of 197.
“Banks are rejecting dollar deposits … they are not able to transfer excess liquidity to their correspondent banks abroad which is restricting importers from using domiciliary accounts,” said Aminu Gwadabe, president of Nigeria’s Bureau de Change association.
Some traders and surprisingly the opposition Peoples Democratic Party have been attacking the new foreign policy regime, that has seen an appreciation of the Nigerian currency.
But the Central Bank issued a press release at the weekend explaining its position.
In the statement titled: “Renewed Vigilance to Prohibit Illicit Financial Flows in Nigeria’s Banking System”, signed by Ibrahim Muazu, Director Corporate Communication, CBN, stated: “The Central Bank of Nigeria (CBN) notes with concern a recent report by the Global Financial Integrity group, which ranks Nigeria as one of the 10 largest countries for illicit financial flows in the world.
“Although we do not have an independent confirmation of this assertion, the report estimates that about US$15.7 billion of illicit funds go through our system annually.”
It added that “CBN will increase its vigilance to ensure that Nigerian banks are not used as conduits for illicit fund flows, especially in foreign currencies.
“We note and applaud that in line with global best practice, Nigerian banks have started to curtail the acceptance of foreign currency cash deposits, much the same way as customers in other countries cannot just walk into banks and make foreign currency cash deposits without proper documentation.
“We wish to assure all citizens seeking foreign currencies for legitimate personal and/or business interests that there remains ample opportunity to do so within the law. The CBN’s Foreign Exchange Rules have many windows for accessing foreign exchange for legitimate business as well as for personal commitments.”
Stock futures fall ahead of a big week of retail earnings
Stock futures fell early on Monday after a week of steep losses that ended on a high note, and ahead of a big earnings week for retailers.
Futures tied to the Dow Jones Industrial Average slipped by 31 points, or 0.1%, while S&P 500 futures fell 0.47%. Nasdaq 100 futures were down 0.71%.
On Friday, the Dow rose 466.36 points, or 1.47%, while the S&P 500 climbed 2.39%. The Nasdaq Composite jumped 3.82% and posted its strongest one-day gain since November 2020. Still, all three averages posted losing weeks.
The gains came as investors went into relief rally mode to cap off a bad week for stocks in which the S&P 500 nearly descended into bear market territory.
It remains to be seen, however, how long the rally will last or how much further stocks have to fall before this year’s downtrend bottoms.
“Given the history of bear markets, coupled with the fact that the Fed has just begun its rate hike cycle and would like to see financial conditions continue to tighten so that demand pulls back further, this rally will most likely weaken,” said Quincy Krosby, chief equity strategist for LPL Financial.
Still, some investors and analysts say, whether or not the bottom is in, there are good buying opportunities at the market’s current lows.
“I’m not calling the bottom here, but there’s some opportunity here to dollar cost average,” said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs, told CNBC. “If you’re sitting on a bunch of cash, you’re locking in losses because of inflation. Investing in equities or asset classes that you believe in… it is the lesser evil. The selling fatigue will wane, the market will reset. It’s unlikely the Dow and the S&P are going to be in correction territory six months to a year from now.”
Retail earnings season kicks off this week with several big-box retailers set to report results for the first quarter, including Walmart, Target and Home Depot. Elsewhere, Deere is also on deck, along with a handful of technology companies.
Investors will also have their eye on retail sales data this week, which could give them insight into how retailers are managing inflation, which remains near 40-year highs.
Nigeria issues new guidelines on cryptocurrencies
The Nigerian government has released new guidelines aimed at protecting investors in digital assets as trades in cryptocurrencies get boost in Africa’s most populous nation.
The rules issued by the Securities and Exchange Commission (SEC) offers more clarity on trading in cryptocurrencies, it was learnt.
The rules cover “issuance, offering platforms and custody of digital assets” for virtual technologies, according to a statement on its website.
This is coming amidst controversy over the acceptability of cryptocurrencies in Nigerian financial ecosystem.
Despite order by the Central Bank of Nigeria (CBN) to commercial banks to stop transactions in cryptocurrencies, Nigeria is said to account for the largest volume of cryptocurrency transactions outside the U.S., as data from Paxful, a Bitcoin marketplace reveals.
Experts however believe this would go a long way in boosting trading in cryptocurrencies which is gaining global traction.
The new rules cover the issuance of digital assets as securities, the registration of platforms and digital asset custodians, exchanges and virtual assets service providers.
Apple is no longer the world’s most valuable company
Oil giant Saudi Aramco on Wednesday surpassed Apple as the world’s most valuable firm.
Aramco’s market valuation was just under $2.43 trillion on Wednesday, according to FactSet, which converted its market cap to dollars. Apple, which fell more than 5% during trading in the U.S. on Wednesday, is now worth $2.37 trillion.
Energy stocks and prices have been rising as investors sell off equities in several industries, including technology, on fears of a deteriorating economic environment. Apple has fallen nearly 20% since its $182.94 peak on Jan. 4.
The move is mostly symbolic, but it shows how markets are shifting as the global economy grapples with rising interest rates, inflation, and supply chain problems.
Aramco stock is up over 27% so far in 2022. In March, the oil giant reported that its full-year profit last year more than doubled due to soaring oil prices.
Apple passed Saudi Aramco to become the world’s most valuable publicly traded company in 2020.
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