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Old January 31st, 2014, 01:06 AM   #1
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Nigeria Central Bank to Move More Currency Reserves in Yuan

Nigeria’s central bank plans to shift more of its $43 billion of reserves into yuan from dollars, the deputy governor said today, as the Chinese currency gains greater prominence in global trade.

The bank will increase the yuan’s share of reserves to as much as 7 percent from 2 percent now, Kingsley Moghalu said in an interview in London, without specifying a timeframe for the change. About 85 percent of Nigeria’s reserves are held in dollars, he said.

“It was clear to us that the future of international economics and trade will shift in large part to business with and by China,” Moghalu said. “Ultimately,the renminbi is likely to become a global convertible currency.”

Nigeria is joining countries including South Korea in adding the yuan to reserves as China opens up its capital market and promotes the use of the currency in international trade and financing. Africa’s biggest oil producer also removed import restrictions on the dollar to support the naira, Moghalu said. The local currency has fallen 1.2 percent this month versus the dollar, after slumping 2.6 percent last year.

Reserve Composition

The central bank started diversifying its reserves into yuan in 2011 and is working with the People’s Bank of China to boost the holdings as soon as the relevant structures are in place, Moghalu said. Nigeria is also considering a dim sum bond sale, although plans aren’t at an “advanced stage,” he said.

The yuan was the eighth most-used currency for global payment system transactions in December, up from 12th in October, according to the Society for Worldwide Interbank Financial Telecommunication. Policy makers from the U.K., the euro-area and South Korea have signed currency swap agreements with China’s central bank as cities including London, Frankfurt and Singapore vie to become offshore yuan trading hubs.

As of the end of June, the euro accounted for about 6 percent of Nigeria’s reserves, followed by special drawing rights of the International Monetary Fund at 5 percent and the sterling at 2 percent, according to data on the central bank’s website. Gross reserves fell 12 percent from last year’s peak in May to $43 billion yesterday, official data show.

Naira Band

Policy makers drew down reserves partly to help support the naira, which is managed by the central bank. The currency was unchanged in interbank trading at 162.24 per dollar as of 7:42 p.m. in Lagos, the commercial capital, after declining as much as 0.6 percent.

The central bank sells foreign currency at auctions held two times a week to help keep the exchange rate within 3 percent of a midpoint of 155 per dollar.

The bank has “not found it necessary” to increase the midpoint of naira’s trading band, Moghalu said. Keeping its key interest rate at an all-time high of 12 percent for more than two years “has helped a lot to maintain the stability of the naira and to check inflation,” he said.

Easing Curbs

“We’ll remain in monetary-tightening mode and possibly increase” rates if government spending jumps before elections in 2015, Moghalu said.

To further ease pressure on the local currency, the central bank has lifted restrictions on imports of dollars that were initially imposed to stem money laundering, Moghalu said.

“We are still committed to combating money laundering, but we will do so in a manner that does not create arbitrage opportunities for currency speculators,” Moghalu said. The weak naira “was just a supply-side issue. By removing the restrictions, we’ll be able to address it.”

While expecting the budget deficit will stay within the government’s target of 1.9 percent of economic output this year, Moghalu said the central bank “has positioned monetary policy to intervene with the necessary responses if fiscal spending gets out of hand.”
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Old January 31st, 2014, 01:13 AM   #2
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Emerging market currencies buckle after Fed cuts stimulus

"LONDON: Emerging markets faced intense pressure on Thursday after the US Federal Reserve cut its stimulus further, with currencies in India, South Africa and Turkey failing to rally despite interest rate rises.

Asian shares fell heavily and European stocks also retreated, extending a global rout driven by worries about emerging markets.

Concerns were stoked when the US central bank further reduced its quantitative easing (QE) stimulus overnight.

Wall Street sank on Wednesday after the Fed said it would reduce its bond-buying programme by $10 billion to $65 billion per month, citing a pick-up in the US economy. That followed a similar announcement in December.

Investors took flight as the news stoked fears of capital flows from emerging markets that have benefited from the Fedís cheap money policy, hitting nations with large current account deficits, as dealers look for safer investments back home."
There are two problems with the official explanation. One is that the purpose of QE has always been to support the prices of the debt-related derivatives on the balance sheets of the banks too big to fail. The other is that the Fed has enough economists and statisticians to know that the recovery is a statistical artifact of deflating GDP with an understated measure of inflation. No other indicator--employment, labor force participation, real median family income, real retail sales, or new construction--indicates economic recovery.
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Old January 31st, 2014, 03:18 AM   #3
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What's the date on this article?
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Old January 31st, 2014, 03:19 AM   #4
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You should invest in the Nigerian Central Bank.
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Old January 31st, 2014, 03:43 AM   #5
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Quote:
Originally Posted by pensacola_niceman View Post
You should invest in the Nigerian Central Bank.
You seem to be missing the point. According to S.W.I.F.T. the yuan has dropped from 12th to the 8the most used currency in the world for trade in a 4 month period of time. At that rate we would lose reserve currency status by August. As a country of importing goods and exporting jobs that has some implications for our economy that an intelligent person would want to look at.
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Old January 31st, 2014, 03:49 AM   #6
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What's the date on this article?
Nigeria Central Bank to Move More Currency Reserves in Yuan - Bloomberg

Much more recent than your picture of the clown in a Marine uniform Im sure.
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Old January 31st, 2014, 04:54 AM   #7
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Of course they're moving to the yuan. The Nigerian Prince scam is played out in the US. They need to start scamming people in China!
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Last edited by Nwolfe35; January 31st, 2014 at 07:48 AM.
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Old January 31st, 2014, 06:45 AM   #8
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Of course their moving to the yuan. The Nigerian Prince scam is played out in the US. They need to start scamming people in China!
and your explanation for the other 4% of global trade from Oct.- Dec. isssssss?
Don't hurt yourself trying to figure that one out. Just let it go.

Look at who "thanked" your comment. That should have been your first clue as to how ridiculous it was.
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Old January 31st, 2014, 07:02 AM   #9
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Originally Posted by pana8 View Post
and your explanation for the other 4% of global trade from Oct.- Dec. isssssss?
Don't hurt yourself trying to figure that one out. Just let it go.

Look at who "thanked" your comment. That should have been your first clue as to how ridiculous it was.
You do realize it was a joke don't you?

Quote:
Originally Posted by pana8
If you have noticed I never bother with him at all. He has nothing of value to say and skip his posts. so I really don't give a rats ass what he does.
Just another example of you "never" bothering with me at all and "skipping my posts"?
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Old January 31st, 2014, 07:22 AM   #10
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Originally Posted by Nwolfe35 View Post
You do realize it was a joke don't you?



Just another example of you "never" bothering with me at all and "skipping my posts"?
Ummmmm what? You came to my thread. You didn't start this thread. Hope that helps.
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