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ECONOMY

Invest in Bitcoin at your risk, CBN warns

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The Central Bank of Nigeria (CBN) says people who invest in cryptocurrencies do so at their own risk because they are not protected by the law.

The apex bank sounded the warning in a statement released on Wednesday by Isaac Okorafor, acting director in charge of corporate communications.

The bank said virtual currencies like Bitcoin, Ripples, Monero, Litecoin, Dogecoin and Onecoin are not legal tender in Nigeria and NairaEx were not licensed or regulated by the CBN.

The CBN said transactions in virtual transactions in virtual currencies were “largely untraceable and anonymous thereby making them susceptible to abuse by criminals, in money laundering and financing of terrorism”.

“Dealers and investors in any kind of cryptocurrency in Nigeria were not protected by law, thus may be unable to seek legal redress in event of failure of the exchangers or collapse of the business,” the statement said.

The CBN had in January 2017 issued a circular urging banks and other financial institutions to be wary of virtual currency operations in Nigeria.

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ECONOMY

REVEALED: Nigeria’s debt rose to N22.4trn in six months

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REVEALED: Nigeria’s debt rose to N22.4trn in six months

The Debt Management Office (DMO) says Nigeria’s total debt rose to N22.4 trillion in the first half of the 2018 financial year.

This represents a three percent increase from the N21.68 trillion recorded at end of December 2017.

Patience Oniha, director general of the DMO, made the revelation while addressing reporters in Abuja on Tuesday.

According to her, the rise in total debt stock was recorded after the federal government issued a $2.5 billion Eurobond in February.

The DMO DG had said the Eurobond issuance—the fifth in the history of Nigeria—will not affect debt level.

“I am particularly pleased that the issuance will enable us to refinance a portion of our existing domestic debt portfolio, with external debt at considerably lower cost, but also that the impact of the process has already led to a reduction in the cost of domestic borrowing, and so a double benefit for the cost of our broader debt portfolio. Lower domestic rates will also benefit corporate borrowers,” Oniha had said.

But speaking on the nation’s debt ratio target during the briefing, Oniha said a 40 percent foreign and 60 percent domestic debt mix was being planned by government.

She said government reduced the interest paid to raise domestic debt, instead of rolling it over as previously done, thereby offsetting about N840 billion worth of local treasury bills in the first half of 2018.

She said there are plans to issue N850 billion worth bonds offshore before the end of 2018, pending approval by the national assembly.

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ECONOMY

ALERT: Turkish lira crisis may put the naira at risk

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Turkish lira crisis may put the naira at risk

The naira may be affected by the ongoing financial turmoil which has seen the Turkish lira lose 40% of its value.

The lira has been in turmoil over worries about the country’s high debt levels, rising inflation, President Tayyip Erdogan’s refusal to consent to an increase in interest rates and tension between the European country and the US.

Erdogan has described his country’s economic problems as an attack; accusing US President Donald Trump of carrying out an operation against Turkey.

He also defended the country’s debt levels saying cheap credit is the way to fuel the economy. Euronews reports that a construction boom in the country has left banks and companies exposed.

Commenting on the risk to the naira, Jameel Ahmad, FTXM’s global head of currency strategy and market research, said investor appetite to emerging-market assets might be reduced.

“Global markets throughout this week are likely to remain dictated by external pressures, with this most likely being encouraged by the intense risks around the Turkish lira crisis,” he said.

“The threat for the Nigerian naira will be that investors continue to remain ‘risk off’ during this period, with a strict reduction in trader appetite towards emerging-market assets.

“This means that emerging market currencies like the naira will be off the table for investors and we can expect for the naira to take guidance from the Lira crisis.

“If the lira continues to worry global investors the naira, like other emerging market currencies, will suffer from the risk-off environment.”

Already, indices on Nigerian Stock Exchange hves been on a downward trend. The South African rand also hit a two-year low on Monday.

Credit: TheCable

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Nigeria’s Central Bank commences sale of Chinese Yuan

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The Central Bank of Nigeria (CBN) on Friday commenced sale of foreign exchange in Chinese Yuan (CNY).
The exercise marks the formal take-off of the Bilateral Currency Swap Agreement (BCSA) the bank signed on April 27, 2018 with the People’s Bank of China (PBoC).
A statement by the CBN spokesperson, Isaac Okorafor, sent to newsmen said the sale shall be through a combination of spot and short-tenored requests.
Mr Okorafor said the Special Secondary Market Intervention Sales (SMIS) retail would be dedicated to the payment of Renminbi denominated Letters of Credit (LCs) for raw materials and machinery and agriculture only.
He said the CBN would receive bids from all authorised dealers.
Due to the peculiarity of the sale, Mr Okorafor said the bank would not be applying the relevant provisions of its revised guidelines for the operation of the inter-bank foreign exchange market.
The guidelines direct all SMIS bids to be submitted to the CBN through the Forex Primary Dealers (FXPDs).
Besides, Mr Okorafor said, the CBN would also not be applying the relevant provisions of the guidelines which equally provide that “Spot FX sold to any particular end-user shall not exceed one per cent of the overall available funds on offer at each SMIS session.”
On the bid period, he said authorised dealers were requested to submit their customers’ bids from 9.00 a.m. to 12.00 p.m. on Friday.
Bids received after the deadline would be disqualified.
On funding, he said authorised dealers were to debit the customers’ accounts for the Naira equivalent of their bids.
On the other hand, the CBN would debit authorised dealers’ current account on the day of intervention with the Naira equivalent of their bid request.
Mr Okorafor further explained there would be no predetermined spread on the sale of FX Forwards by Authorised Dealers to end-users under the Special SMIS-Retail.
He said authorised dealers would be allowed to earn 50 kobo on the customers’ bids.
The bids, the CBN spokesperson said, were on Spot FX basis as the authorised dealers’ accounts with the CBN would be debited in full for the Naira equivalent of the dollar bid amount.
Customers that were not willing to accept the settlement terms were advised not to participate in this Special SMIS – Retail.
Similarly, he said, forward bids would be settled through a multiple-price book building process to be cut-off at a marginal rate to be disclosed after the conclusion of the Special SMIS–Retail process.
“Customers not willing to accept the terms of the forward rate are not to participate in this Special Chinese Yuan SMIS Intervention,” he said.
“CBN reserves the right not to make a sale if it has the impression the exercise did not provide an effective price for the determination of the CNY/NGN exchange rate.”

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