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Tag: forex

  • Naira rallies amid positive ratings on forex stability

    Naira rallies amid positive ratings on forex stability

    The naira rose by 2.3 per cent to close weekend at N1,553 per dollar, sustaining a steady rally on the back of widespread optimism on stability of the Nigerian foreign exchange (forex) market.

    Data from the Central Bank of Nigeria (CBN) showed that naira, which had opened last week at N1,579.27, maintained steady closing the week stronger.

    Analysts at Cordros Capital stated that the naira gain was due to inflows from foreign portfolio investors (FPIs).

    Analysts projected that naira would remain relatively stable in the near term, citing gradual moderation in global headwinds and the capacity of the apex bank to moderate market fluctuations.

    “The easing of global pressures has partly contributed to a renewed interest from foreign investors in the Nigeria’s capital markets, thereby enhancing forex inflows,” Cordros Capital stated in a weekend review.

    The CBN has in recent months, activated multiple forex sources to increase dollar inflows, boost dollar access to manufacturers and retail end users and support naira recovery across markets.

    Global rating agencies – Moody’s and Fitch – had cited the forex market outlook as part of the consideration for their latest upgrades of Nigeria’s sovereign ratings.

    From moves to improve diaspora remittances through new product development, the granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller FX model, and enabling timely access to naira liquidity for IMTOs, the apex bank has simplified dollar-inflow channels for authorised dealers and other players in the value chain.

    Given that FX inflows to the economy are strategic in achieving monetary and fiscal policy stability, the CBN under its Governor, Olayemi Cardoso puts in a lot of efforts in attracting more inflows into the economy.

    Diaspora remittances to Nigeria, estimated at $23 billion annually, remain a reliable source of forex to the domestic economy. There are also other sources and policies that are being explored by the apex bank to keep dollar inflows coming.

    Read Also: Top 3 Reasons to Join a Funded Forex Trading Program

    The CBN’s initiatives have supported continued growth in these inflows, aligning with the institution’s objective of doubling formal remittance receipts within a year.

    The remittances in the economy is expected to increase based on  CBN’s ongoing efforts to bolster public confidence in the foreign exchange market, strengthen a robust and inclusive banking system, and promote price stability, which is essential for sustained economic growth.

    Director of Trading at Verto, Charlie Bird, said dollar liquidity dynamic is now more balanced, with foreign investors and airlines able to repatriate funds.

    Speaking during Cordros Asset Management seminar titled: “The Naira Playbook”, he said Nigeria is now  darling of foreign investors because of improved dollar liquidity in the economy due to positive CBN’s reforms.

    For instance, the CBN under Cardoso, recently announced the introduction of two new financial products designed to serve Nigerians living abroad and attract more diaspora remittances.

    These and other measures, including the granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller model, and enabling timely access to naira liquidity for International Money Transfer Operators (IMTOs).

    The CBN recently released the reviewed guidelines of International Money Transfer Services in Nigeria. These Guidelines mark a significant shift in how IMTOS conduct their operations, reflecting the CBN’s ongoing efforts to enhance transparency and efficiency in foreign exchange transactions and to bolster diaspora remittances into Nigeria.

    Further circular titled “New Measures to Enhance Local Currency Liquidity for Settlement of Diaspora Remittances” highlighted the apex bank’s commitment to improving the Nigerian foreign exchange market infrastructure by increasing the flow of remittances through formal channels.

    It introduces measures aimed at providing licensed IMTOs with access to Naira liquidity from the CBN, facilitating the disbursement of remittances to beneficiaries.

  • Is Forex Trading Legal in Africa?

    Is Forex Trading Legal in Africa?

    Traders who want to capitalise on the boom in the global currency market can leverage Forex trading in Africa. There are no rules that make it illegal for Forex traders, as the Financial Sector Conduct Authority governs it. Brokers who are regulated by such authority are free to offer their services to traders. Due to the presence of a world-class regulatory structure, traders are safe to trade Forex in Africa.

    There are multiple forex trading apps in South Africa that are beginner-friendly and offer complete support to traders. Although traders can take advantage of the Forex market, it can be a mistake to trade without considering all the legal formalities in Africa. This is why African traders must understand a few factors before starting their Forex trading journey.

    If you want to enter the Forex trading market in Africa, this guide can help.

    Forex Trading Laws and Regulations in South Africa

    The Financial Sector Conduct Authority(FSCA) is a regulatory body that licenses Forex brokers in South Africa. New traders can also get FSCA-regulated brokers to reduce the chances of legal implications. This can save time and effort in finding a suitable broker. Selecting the best Forex brokers can help South African traders follow ethical standards and strict operations.

    This also keeps a transparent fee structure and ensures no extra costs. Working with regulated brokers helps in maintaining segregated client accounts and protects your funds. Therefore, this can maximise your trading experience and reduce risks.

    Two common laws are always instilled by FSCA for trading Forex in South Africa. These regulations are important to avoid any legal issues and financial penalties.

    • In order to get the FSCA license for Forex trading, you must verify the broker’s FSCA registration. It protects traders from fraudulent activities.
    • Traders can choose a broker from Africa or a foreign country. In the case of a foreign broker, they are subject to any regulatory body that oversees them. However, this may not be as protective according to FSCA standards.

    Broker Regulatory Requirements

    Every broker licensed by the FSCA must follow some standards. These are as follows:

    Leverage Limits: If investors want to access higher leverage, they must meet specific criteria. This is decided based on the minimum net worth for the leverage limit.

    Segregated Client Accounts: Brokers cannot use their clients’ money for personal business. This is why African rules segregate clients’ funds to ensure maximum safety. If a broker collapses, the client’s money is safe and can be recovered. This helps safeguard clients when brokers face any financial difficulties.

    Fit and Proper Standards: To meet this requirement, brokers need the following: 

    • No criminal records or involvement in unlawful activities
    • Completion of regulatory exams
    • Latest knowledge of the Forex market
    • Technical Tools and operational abilities
    • Risk management strategy and sound liquidity

    Representative: If a broker wants to operate in Africa, he must have at least one African representative.

    Insurance: To avoid any financial lapses, the broker is urged to have proper professional indemnity insurance.

    Operational Capital: Financial stability is very important for Forex brokers. They must have proper capital to withstand losses and continual operations for reliable financial stability.

    K-Y-C to Avoid Money Laundering: KYC documentation is important for Forex trading in South Africa. It is a way to avoid money laundering or financial scams in Africa by unauthorised bodies. You must submit the following documents to complete the KYC:

    • A colour copy of a valid ID (passport, driver’s license or ID Card)
    • A recent utility bill (e.g. electricity, gas, water, phone, oil, Internet and/or cable TV connection, bank account statement)
    • Your current home address

    Growth of Forex Trading in South Africa

    Africa is growing rapidly and is estimated to reach 4.2% in 2025, as per the AFDB. This is attracting potential investors to its Forex trading market. Africa has leading countries like South Africa and Nigeria, with the biggest market share in its Forex industry. This is due to the presence of an educated young generation willing to trade in Forex.

    Moreover, Kenya, Ghana, and Cameroon are witnessing strong demand for Forex trading. Due to this, many big Forex trading companies are setting up operations in African countries to maximise their potential.

    Final Remarks

    Compared to other countries, South Africa focuses on the safety of Forex traders. This makes it a lively and reliable environment in which to trade in the Forex market. There are supportive South African policies like the Financial Advisory and Intermediary Services (FAIS) Act. This act outlines the responsibilities of financial service providers, further ensuring safe trading.

  • CBN steadies naira despite surge in forex demand

    CBN steadies naira despite surge in forex demand

    • Authorised dealers get $360m in one week

    • Forex reserves rebound to $38.36 billion

    The Central Bank of Nigeria (CBN) prevented consistent depreciation of the naira against dollar with sustained market intervention and reduced market distortions, which prevented a sharp depreciation of the local currency, report on naira performance has shown.

    The official foreign exchange (forex) rate depreciated by 1.3 per cent to N1,537.50 per dollar  as CBN’s robust intervention — selling $360.00 million to authorised dealers — helped mitigate a steeper devaluation amid the resurgence of demand pressures.

    Analysts at Cordros Research, said the gross FX reserves increased by $12.06 million week-on-week to $38.36 billion, after 9 consecutive weeks of decline.

     “Concerns about oil receipts underpinned by lower oil prices are likely to temper net forex inflows from foreign portfolio investors (FPIs), likely sustaining pressure on the naira. Nonetheless, CBN’s sustained market intervention and reduced market distortions are expected to prevent a sharp depreciation of the naira,” the report said.

    The Treasury bills secondary market was mixed last week as market participants shifted focus to the primary market auction.

    Consequently, the average yield declined by one basis point to 20.7 per cent.

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    Across the market segments, the average yield was flat at 19.2 per cent in the NTB segment but declined slightly by three basis points to 22.4 per cent in the Open Market Operations (OMO) segment.

    The Debt Management Office (DMO) last week offered bills worth N550.00 billion – NGN70.00 billion for the 91-day, N80.00 billion for the 182-day, and N400.00 billion for the 364-day bills.

     “Next week, following our projections of liquidity dearth in the financial system, we expect yields in the treasury bills secondary market to rise,” the report said.

    Similarly, investors took a cautious stance in the FGN bond secondary market as the limited bids matched offers. Accordingly, the average yield increased by one basis point to 18.5 per cent.

     “In the coming week, we anticipate a decline in yields driven by expectations of reinvestment of coupon inflows. Over the medium term, we still expect a moderation in yields consequent on the anticipated monetary policy administration and demand and supply dynamics,” the report said.

    Meanwhile, recent data from the International Monetary Fund (IMF’s) Currency Composition of Official Foreign Exchange Reserves (COFER) point to an ongoing gradual decline in the dollar’s share of allocated foreign reserves of central banks and governments.

    Strikingly, the reduced role of the US dollar over the last two decades has not been matched by increases in the shares of the other “big four” currencies—the euro, yen, and pound.

    Rather, it has been accompanied by a rise in the share of what we have called nontraditional reserve currencies, including the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar, and the Nordic currencies.

    One nontraditional reserve currency gaining market share is the Chinese renminbi, whose gains match a quarter of the decline in the dollar’s share.

    The Chinese government has been advancing policies on multiple fronts to promote renminbi internationalization, including the development of a cross-border payment system, the extension of swap lines, and piloting a central bank digital currency. It is thus interesting to note that renminbi internationalization, at least as measured by the currency’s reserve share, shows signs of stalling out.

  • Naira rallies N145 gain amid forex stability

    Naira rallies N145 gain amid forex stability

    • Speculators suffer losses
    • Experts see steady gain

    The naira recorded major comeback in February, positing one of its biggest wins in recent months.

    The local currency, which opened February at N1,640 to dollar at the parallel market closed the month stronger at N1,495 to dollar, representing N145 gain within the month.

    At the official market, the naira closed at N1,492 from N1,620 it started the month of February on.

    Michael Nwadike, FX Analyst said FX Speculators lost over N10 billion in current naira rally and will record more losses as the greenback holders dump it in open market. 

    According to him,  the era of forex speculation and distortions in the domestic foreign exchange market came to an end after the   Central Bank of Nigeria (CBN)-backed Electronic Foreign Exchange Matching System (EFEMS) began operations.

    The implementation of the FX policy, came with diverse implications for all segments of the financial markets that deal on forex, including rebound in the value of the naira across markets.

    “A stabilising naira is good for everyone stabilising at both the official markets, but sad over capital loses. This is not the time to hoard dollar because naira is fast finding its feet,” Olakunle Amos, FX trader based in Mushin Lagos.  According to Bureau De Change operators in Wuse Zone 4, Abuja, naira rally made it difficult for speculators to make new purchases.

    One of the traders Aminu Bakori said that he was surprised that the naira could record such gain within a short period.

    He said the CBN’s decision to extend $25,000 weekly sale to Bureaux De Change (BDCs) at the Nigeria Foreign Exchange Market (NFEM) by four months is also impacting positively on the naira.

    He said the sale of dollars to BDCs at the official market rate was to enable the operators meet rising demand for foreign exchange.

    Asked what he thought was responsible for the positive turn in the fortunes of the Naira, Bakori said: “The CBN recently reminded the general public, especially travelers of the continued availability of personal travel allowance and business travel allowance from their banks to meet their personal and business travel requirements”.

    Read Also: Ministry projects $100b contribution to GDP, 2m jobs, others in 2030

    Continuing, he said the apex bank promised that all legitimate and eligible foreign exchange transactions are expected to be complete in the NFEM, at the market determined exchange rate.

    “The CBN reaffirmed its commitment to a fully functional foreign exchange market as it continues to provide liquidity when necessary to manage price volatility which brought positive feedback into the market,” he said.

    Other FX operators said the era of forex speculation and distortions in the domestic foreign exchange market came to end with the ongoing implementation of FX Code.

    However, Prof. Jonathan Aremu, a retired CBN Director, has warned that it is too soon to celebrate.

    Aremu, a Professor of International Economic Relations at Covenant University, is also a Regional Expert on Trade and Investment for ECOWAS.

    Aremu called for increased production to sustain the Naira’s gains.

    He described the currency’s steady appreciation against the Dollar as a positive development.

    “But it may not be time to celebrate yet because, within this period, we have also seen moments when the Naira depreciated,” he said.

    He urged the CBN to focus on boosting productive activity in the economy to maintain stability.

    According to him, the apex bank should look beyond interest rates and consider other factors influencing production and liquidity.

    “The quantity theory of money states that money supply and population value must equal price and transaction volume in the economy.

    “If policy only targets money supply without increasing transactions, the expected appreciation of the Naira will not materialise.

    “The economy needs a higher volume of goods and services. Many goods are available, but their prices depend on supply and demand.

    President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said he believed the apex bank remained committed to resolving the foreign exchange issues confronting the nation and as such has been working to manage both the demand and supply side challenges.

    While admitting that there was huge demand pressure for foreign exchange to meet the needs of manufacturers as well as those for the payment of tuition, medical fees and other invisibles, he added that the monetary authority was strategizing to help Nigeria earn more stable and sustainable inflows of foreign exchange in the face of dwindling inflows from the oil sector.

    Specifically, he noted that recent initiatives undertaken by the Bank such as the FX code policy, Electronic Foreign Exchange Matching System (EFEMS), had helped to increase foreign exchange inflow to the country.

    On his part, CBN Governor, Olayemi Cardoso described EFEMS as one of the many gains of the exchange rate unification policy, expected to birth several other gains in the market operation.

    He said the policy will not only put forex market distortions under check, eliminate speculative activities and instill transparency, but will also make it difficult for abuse in the market to persist.

    Cardoso said an enabling policy environment has led to a doubling of monthly remittances from an average of $300 million in 2023 to nearly $600 million in August 2024.

    “We are committed to further integrating the Nigerian diaspora into our financial system, exemplified by the introduction of the non-resident Bank Verification Number registration. We expect our financial institutions to develop products that not only enable the diaspora to support their families but also provide opportunities for savings and investment in Nigeria,” Cardoso said.

    Cardoso said the current exchange rate for the naira does not reflect the true value of the local currency.

    He said the current US dollar exchange rate reflects the price that the most desperate buyers are willing to pay, and this, in the apex bank’s view, does not represent the true market value of the naira.

    The CBN boss said the apex bank expects that the introduction of the electronic marketing system will correct these distortions by enhancing price discovery process for the naira.

     Additionally, he stated that the move will significantly boost the central bank’s oversight and integration capabilities, ensuring a more stable and transparent foreign exchange market.

    Cardoso also said that an FX market defined solely by when and how the central bank buys or sells dollars is inadequate for the needs of a dynamic economy like Nigerians.

    “Now is the time for banks to step up to their intermediation and market making responsibilities providing customers with the right solutions to run their businesses and manage risk effectively, “ he said.

  • Illicit forex demand

    Illicit forex demand

    • Regulators have to be more creative in battling the operators

    Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, last week offered a rare but candid insight on the scourge of foreign exchange volatility that the managers of the economy will do well to pay closer attention to. The occasion was The Platform Economic Outlook for 2025 organised by The Covenant Nation – a Lagos-based church. “Nigeria’s biggest problem with forex”, he said, “is not the supply of forex; it is the illicit demand for forex. If I want to be politically correct, I will say it is the discretionary demand for forex in both the public and private sectors. In the public sector, there are people who control our resources and feel that, first and foremost, it is their own money for the time that they are there. They collect those monies, and they are chasing dollars to buy. Even the Central Bank said that when they release FAAC, the exchange rate just seems to misbehave during that period. One million here, two million here; and that is still going on. We don’t need that dollar, but we are still buying it. That is an artificial demand, or, put differently, discretionary demand”. He didn’t stop there. “The bigger the size of corruption, the bigger the impact of that discretionary demand. It is happening also in the private sector. A majority of the average Nigerians have not seen a dollar banknote in their life, but the elite, the high-net-worth individuals, the super-rich, and some of the middle class have. There is a self-fulfilling prophecy when you think that naira will lose value. You are converting all your savings to dollars. The domiciliary account balance has increased by more than $6bn in the last 18 months. The balance is over $30bn”.

    Read Also: Troops recover 30,000 litres of stolen products, destroy 13 illegal refineries in Niger Delta 

    Most Nigerians, we daresay, will find this analogy easy to relate with. In fact, there could hardly be a better characterisation of the paradox of a country which, although barely makes enough forex to cover its import bills, yet whose over-indulged elites either maintain a disproportionate trove of forex in secret vaults locally for their convenience, or devise all manner of mechanisms to transfer them abroad. To state that the current mechanisms for forex management have not exactly had their desired effects is merely stating the obvious. In fact, the characterisation of illicit forex demand, while apt, could easily have been a window into the broader story of organised crime, corruption, criminal sabotage, influence peddling and possibly terrorism that the country has had a hard time battling. Yet, it stands to reason that the situation being described could never have been without the unscrupulous activities of many of the so-called licensed Bureaux de Change operators (BDCs) and their alter ego – the so-called black market. So intrinsically linked are their activities that it has become nigh impossible to separate them. The least that could be said of many of these ubiquitous operators is that they not only dictate what happens in the forex management segment but have largely played the enablers of those activities so correctly identified by Oyedele.

    With networks vast and large, and their ancillary infrastructure so deeply entrenched and often times far beyond

    the visors of the regulators, their staying power should, in the context, be understood from the standpoint of the insatiable even if illicit demands of their elite, above-the-law patrons.That is why the mission to sanitise the sector has proven tough and difficult – although not necessarily impossible.

    At this time, the least the CBN and the Nigerian Financial Intelligence Unit (NFIU) in particular could do is to find more creative ways to address the problem. From more effective ways to monitor the activities of BDC operators, to stricter monitoring at the borders to deter forex trafficking, to renewed clampdown on the dollarisation of the economy, right up to tracking the nexus between the monthly activities of the Federation Accounts Allocation Committee (FAAC) and the activities at the parallel forex market segment, there is surely a lot the authorities can do to stem the menace. The time to begin is now.  

  • ‘$50b FDI a panacea to stabilising nation’s inflation, forex’

    ‘$50b FDI a panacea to stabilising nation’s inflation, forex’

    Nigeria must attract at least $50 billion in foreign direct investment (FDI) to reduce inflation to five percent by 2025, according to CEO of Economic Associates, Ayo Teriba, speaking on a nation Television. The Economist emphasized that expanding the country’s net reserves and attracting capital inflows are essential to achieving macroeconomic stability.

    Teriba’s comments comes as President Bola Tinubu targets lowering inflation to 15 percent next year, a goal many analysts have called unrealistic amid rising food and fuel prices. Inflation surged to a 28-year high of 34.6 percent in November, putting pressure on the economy.

     “With sufficient capital inflows and stronger foreign reserves, the exchange rate will stabilize, and inflation can drop to single digits,” Teriba stated. Citing Argentina as an example, he said inflationary pressures can be reversed if bold investment reforms are implemented.

    Teriba called for immediate reforms to attract substantial FDI, which he argued could transform Nigeria’s struggling economy. While FDI inflows rose by 248 percent in Q3 2024 to $103.82 million, this remains insufficient to drive the growth needed for an economic turnaround.

     “If the president can complement tax and finance reforms with an investment act to attract $50 billion in FDI within the next year, inflation will drop, and exchange rates will stabilize,” Teriba said.

    However, Nigeria’s FDI has been on a decline, falling to a record low of $29.8 million in Q2 2024, down from $119 million in Q1. Teriba noted that existing policies, especially those focused on debt servicing, undermine the country’s ability to achieve economic stability.

    Teriba criticized Nigeria’s heavy reliance on debt to fund fiscal deficits, describing it as unsustainable. He argued for equity-based financing as a more efficient alternative to borrowing at high interest rates, which he attributed to Nigeria’s poor credit rating.

     “The interest rates Nigeria faces are among the highest globally. Borrowing under such conditions is inefficient and counterproductive,” he said. “We should prioritize equity over debt to create a sustainable economic structure.”

    Read Also: Leverage in Forex and Crypto Trading – The Fine Line Between Opportunity and Mastery

    The economist also highlighted the inefficiency of Nigeria’s debt instruments, noting that comparable economies borrow at significantly lower rates by issuing higher-grade bonds.

    Teriba urged the federal government to adopt a robust investment strategy that includes structural reforms and incentives to attract foreign capital. He warned that without such measures, inflationary pressures will persist, jeopardizing economic stability.

     “If we remain on this trajectory of high-interest borrowing, we risk missing the opportunity to stabilize our economy,” he warned. “Bold reforms and significant FDI inflows can usher in an era of growth and stability for Nigeria.”

    As Nigeria faces mounting economic challenges, Teriba’s recommendations highlight the critical need for decisive action to restore confidence and lay the groundwork for sustainable development.

  • Leverage in Forex and Crypto Trading – The Fine Line Between Opportunity and Mastery

    Leverage in Forex and Crypto Trading – The Fine Line Between Opportunity and Mastery

    Trading has a certain allure. It’s a cocktail of strategy, intuition, and the tantalizing possibility of turning a modest investment into a life-changing sum. For many, leverage is the secret ingredient. This tool allows traders to control positions far larger than their initial investment. But while leverage is a game-changer, the real question is: are you prepared to play the game wisely?

    The Sweet Spot of Leverage

    Leverage is like getting a turbo boost in a race. Imagine having $100 in your trading account and, with leverage, being able to trade as if you had $10,000. Sounds incredible, right? That’s because it is. Leverage magnifies your trading power, which means profits can soar to heights unimaginable with just your initial deposit.

    In the Forex market, brokers often offer leverage ratios as high as 1:500 or even 1:1000. This means with a mere $100, you can trade positions worth up to $100,000. In crypto trading, the ratios can vary, but the concept remains the same. The potential for high returns is what keeps traders hooked.

    Statistics back up the allure of leverage. According to a report from the Bank for International Settlements, the global Forex market sees a daily turnover of over $7.5 trillion. A significant portion of these trades is driven by leveraged positions. The numbers don’t lie – leverage amplifies your presence in the market, giving you access to opportunities that would otherwise be out of reach.

    Understanding the Risks Without Fear

    While leverage can amplify profits, it’s also important to acknowledge that the same applies to losses. But here’s the good news – with the right approach and discipline, traders can manage these risks effectively. It’s about strategy, not luck.

    Most brokers offer tools like stop-loss orders and negative balance protection to help traders manage their exposure. These aren’t just fancy terms; they’re your safety net. Stop-loss orders automatically close your trade when the market moves against you, ensuring your losses are limited. Negative balance protection ensures you never owe more than you invest, keeping your financial standing intact.

    Exness as a Great Example

    If you’ve dabbled in Forex or crypto trading, chances are you’ve come across Exness. Known for its impressive leverage offerings, Exness allows traders to operate with ratios that push the boundaries of trading. But the burning question on every trader’s lips is: is Exness legit?

    The answer is a resounding yes. Exness is not only regulated by multiple top-tier financial authorities, but it also boasts a transparent operating model. Traders around the globe trust this platform, not just for its leverage options, but for its reliability and user-friendly interface. Whether you’re a newbie testing the waters or a seasoned trader looking to optimise your strategy, Exness delivers a seamless experience.

    Crypto Trading and Leverage – A Dynamic Duo

    Crypto trading, with its round-the-clock market and wild volatility, is a different beast altogether. Leverage in this space can be both thrilling and profitable. For instance, in 2021, Bitcoin witnessed a single-day price swing of over 10%. A trader using 10x leverage during such a move could have seen significant returns within hours.

    Platforms like Binance and Bybit have capitalised on this, offering leverage options specifically tailored for crypto enthusiasts. While the appeal of leveraging in crypto trading is undeniable, having a clear strategy is non-negotiable.

    The Magic of Compound Gains

    One of the underrated perks of leverage is its ability to amplify compound gains. Let’s say you start with $500 and earn a modest 2% profit daily. Without leverage, you’d grow your account to around $1,200 in a month. Now, introduce leverage into the equation. With a 10x leverage, the same strategy could see your account skyrocket past $12,000 within the same period.

    These numbers aren’t fantasy. They’re achievable for disciplined traders who understand the power of compounding. By reinvesting profits and maintaining a consistent strategy, leverage can become your ultimate tool for financial growth.

    Why Mindset Matters

    Here’s the thing about leverage – it’s not just a tool, it’s a mindset. Successful traders see leverage as an ally, not a gamble. They approach it with respect, knowing it can open doors to opportunities that were once out of reach.

    Education plays a huge role here. Before diving headfirst into the world of leveraged trading, take time to learn. Read books, watch webinars, and practise on demo accounts. This isn’t just about avoiding mistakes; it’s about mastering your craft.

    The Global Appeal of Leveraged Trading

    Trading isn’t limited to a particular region or demographic anymore. Across Nigeria, South Africa, and other parts of the world, traders are embracing leverage to redefine their financial futures. With brokers offering localised services and tailored leverage options, it’s easier than ever to get started.

    Data from Statista shows that the Neobrokers market in Nigeria is projected to grow by 3.19% (2024-2028) resulting in a market volume of US$47.45m in 2028, with over 1.3 million Nigerians are actively engaged in Forex trading, many of whom are taking advantage of leverage. This surge isn’t just a trend; it’s a movement. It’s proof that leverage is empowering traders to achieve more, regardless of their starting capital.

    Conclusion

    Leverage is the ultimate trading amplifier. It takes your efforts, multiplies them, and puts you in the driver’s seat of your financial journey. The key is understanding it, respecting it, and using it wisely.

    Whether you’re eyeing Forex, crypto, or a mix of both, leverage can unlock a world of possibilities. Platforms like Exness make it even easier to tap into these opportunities with confidence. So, is leverage all about high rewards or high risks? The answer lies in how you wield it. With the right approach, the rewards are yours for the taking.

  • Forex inflows hit $4.05b

    Forex inflows hit $4.05b

    Total inflows into the foreign exchange (forex) market have reached a new threshold of $4.05 billion following increasing confidence in the Nigeria’s macroeconomic outlook.

    The outlook continues to win domestic and global supports.

    Latest report at the Nigerian Autonomous Foreign Exchange Market (NAFEM) yesterday indicated that monthly inflows to the forex market rose to $4.05 billion last month, an increase of more than $1 billion.

    The surge was particularly driven by inflows from foreign sources, which jumped to its highest level in nearly five years.

    The report showed increasing uptick in forex inflows with a successive monthly improvement.

    The inflows rose from $3.04 billion in October to $4.05 billion in November, representing an increase of 32.9 per cent.

    NAFEM data, obtained from the FMDQ Securities Exchange, showed improved inflows from domestic and foreign sources, providing a steady mix for the stability and liquidity that have characterised the forex market in recent period.

    A breakdown indicated that inflows from foreign sources rose by 26 per cent from $1.36 billion in October to $1.71 billion in November, its highest level since January 2020.

    The increase in inflows from foreign sources was driven by substantial inflows from foreign portfolio investors and other companies, which rose by 39.9 per cent and 43.9 per cent respectively.

    Inflows from local sources also rose by 38.5 per cent from $1.69 billion to $2.34 billion, driven by inflows from the Central Bank of Nigeria (CBN) and non-bank corporates, which rose by 27 per cent and 56 per cent respectively.

    Inflows from individuals and exporters however fell by 88.5 per cent and 63.5 per cent respectively.

    The latest NAFEM data came on the heels of a major rally by the naira after the apex bank launched a new forex trading system aimed at streamlining forex transactions. The CBN had last Monday launched its Electronic Foreign Exchange Matching System (EFEMS), shining deeper light on transactions.

    The naira appreciated last week by 7.3 per cent to close weekend at N1, 558.65 per dollar. Nigeria’s forex reserves also built up further by $68.65 million to $40.30 billion.

    Cordros Capital, an investment banking group, said the forex market would remain positive in the period ahead, citing improved investors’ confidence.

    The group said: “We attribute the sturdy performance in foreign portfolio investment (FPI) inflows to improved investor confidence and increased FPI participation in the Nigerian capital market as naira yields remain attractive.

    “Barring any shock, we anticipate forex inflows to remain robust in the short term, supported by improved market confidence, following the implementation of the Electronic Foreign Exchange Market System (EFEMS),” Cordros Capital stated in a weekend note.

    Other analysts said they expected the efficiency from EFEMS and attractive yields on Nigerian assets to continue to support inflows from foreign investors.

    At Afrinvest West Africa, some analysts said they expected the naira to remain on the upswing, citing improved market confidence following the successful launch of the EFEMS.

    “We anticipate the Naira to regain more ground against the dollar this week, driven by aforementioned factors,” Afrinvest stated.

    Last week, Nigeria’s $2.2 billion Eurobond recorded a 300 per cent oversubscription with investors staking $9 billion on the country’s first Eurobond in more than two years.

    Nigeria offered two tenors of a six and half years and 10 years Eurobonds, with both medium-tenor and long-tenor bonds oversubscribed.

    The strong international demand has allowed Nigeria to tighten its coupon rates with the guidance rates for the 6.5 years and 10 years bonds at 9.625 per cent and 10.375 per cent respectively, a substantial discount to initial guidance.

    The latest report on FPIs also shows that foreign portfolio investors were showing stronger appetite for Nigerian assets with more than two out of every three transactions by foreign investors at the Nigerian stock market on the investment side.

    Official trading report indicated that that foreign portfolio inflows nearly tripled in the past month, leaving Nigeria with foreign portfolio investment (FPI)’s surplus of N19.16 billion, the highest monthly upside this year.

    Read Also: Issuing houses: Forex reforms facilitated more foreign investments

    Foreign portfolio inflows, which denote the buy side, rose by 195.83 per cent to N33.31 billion in October, a remarkable rebound from this year’s low of N11.26 billion in September 2024. This represented a surplus of N19.16 billion.

    On the other hand, foreign portfolio outflows, the sell side of the transactions, dropped to its lowest this year at N14.15 billion, 53.07 per cent lower than N30.15 billion recorded in September.

    The recovery in FPI inflows and increased domestic demand boosted total transactions at the Nigerian Exchange (NGX) in October 2024 to N502.73 billion, the highest in seven months.

    Total transactions stood at N493.01 billion in the previous month. Domestic transactions increased from N451.60 billion in September to N455.27 billion last month.

    With the upswing in the immediate past month, total transactions at the NGX hit a 10-month record of N4.47 trillion, 52.6 per cent above N2.93 trillion recorded in the corresponding period of 2023.

    The FPI transactions for the 10-month period stood at N744.34 billion, 155.5 per cent above the N291.38 billion recorded in comparable period of last year.

    The FPI inflows for the 10-month period stood at N344.30 billion as against N122.55 billion in 2023 while outflows stood at N400.04 billion compared with N168.83 billion.

    Meanwhile, the proportion of foreign participation in the Nigerian market increased from 9.93 per cent last year to 16.65 per cent this year.

    Domestic transactions totaled N3.73 trillion within the 10-month period, 41.07 per cent above the N2.64 trillion recorded in the comparable period of 2023.

    The FPI report, coordinated by the NGX, included transactions from nearly all custodians and capital market operators and it is widely regarded as a credible measure of foreign portfolio trend.

    The report uses two key indicators-inflow and outflow, to gauge foreign investors’ mood and participation in the equities market and the economy.

    “While inflows and outflows indicate direction of portfolio transactions, total FPI measures the momentum and level of participation.

    The October performance set a new record above the market’s third quarter performance. Total transactions at the stock market had risen to N3.97 trillion in the first nine months of this year, the highest third quarter turnover according to available official records of the market.

    The third quarter 2024 performance represented a new record against the market’s turnover in third quarter 2023, when the market had set a high of N2.71 trillion. The closest records were in 2018 and 2014 when the market recorded N2.01 trillion and N2.04 trillion respectively.

    Experts attributed the upbeat at the stock market to the increasing attractiveness of the Nigerian market to foreign investors, ongoing economic reforms, resilient earnings by Nigerian companies, exchange rate differential, ongoing banking recapitalisation and the reform in the oil sector.

    Managing Director, AIICO Capital, Dr. Femi Ademola, said Nigerian equities have become very attractive to both foreign and domestic investors.

    Ademola, a Chartered Financial Analyst (CFA), said: “The equities market has become very attractive, mostly due to the devaluation of the currency which makes the shares very cheap, especially to foreign investors.

    “The very strong half-year performance reported by corporates especially banks and the corporate actions that followed the announcements have also driven many investors to the equities market.

    “Finally, the lack of volatilities in the bond market makes it unattractive to investors, thus they flock to the equities market.”

    Managing Director, Arthur Steven Asset Management, Mr. Olatunde Amolegbe, said the ongoing banking recapitalisation and the reforms in the oil sector have driven more investors to the market.

    Amolegbe said: “We’ve seen increasing return of foreign portfolio investors, I understand the turnover by FPIs has grown significantly in the last few months. This can be attributed to the weaker naira that makes Nigerian stocks a bargain for FPIs.

    “Secondly, new listings such as Aradel also boosted investors’ appetite for stocks. This can also be seen in the light of the approval of the Exxon Mobil’s acquisition by Seplat by the Federal Government.

    “Thirdly, the banking recapitalisation along with impressive second quarter reports have continued to attract investments towards that sector,” Amolegbe, a former President of Chartered Institute of Stockbrokers (CIS), said.

    Managing Director, HighCap Securities, Mr. David Adonri, said the banking sector has contributed substantially to the growing turnover at the stock market.

    “The recapitalisation of banks is orchestrating demand for their shares even in the secondary market. Highly capitalised stocks in the petroleum sector have also been upbeat. Finally, investors have also reacted positively to the big interim dividends declared by banks,” Adonri said.

    A report by Afrinvest West Africa had indicated that FPIs in the Nigerian market could reach N1.1 trillion by the end of 2024 as foreign investors continued to increase their stakes on Nigerian securities.

    Analysts at Afrinvest West Africa stated that at the current run rate, the size of foreign participation at the stock market should reach N1.1 trillion by year-end, translating to a 267.8 per cent increase on 2023.

    The firm estimated that total FPIs, including equities, money, and bond markets, could swell fourfold to $5.2 billion in 2024 in a base case scenario.

    Analysts noted that even when adjusted at exchange rate of N1,510.10 /$, the prevailing rate should deliver about $728.4 million participation size on the NGX, representing a 60.9 per cent increase over the 2023 actual that was converted at an exchange rate of N907.10 per dollar.

    “This marked improvement underscores the gradual return of foreign portfolio investors to Nigeria – a development we believe is largely connected to the ongoing reforms by the CBN,” Afrinvest stated.

    The report highlighted a strong and positive correlation between FPI inflow data reported by the NBS in dollars and foreign investor participation statistics reported by the NGX in naira.

    Afrinvest noted that the correlation was not a surprise given that equity is one of the three investment portfolio areas into which FPIs are deployed.

    The report pointed out that although FPIs are less reliable in building sustainable foreign exchange (forex) buffers due to their characteristic nature of flight to safety, the recent dynamics if sustained hold positive for stabilising the exchange rate in the short to medium term.

    Analysts noted that the relaxation of capital controls, which led to payment of forex backlogs, and financial repression tactics adopted under the last CBN regime supported the improved sentiment.

     “Overall, we posit that sustaining the improvement in FPI could help support a near term easing in price and exchange rate pressures,” Afrinvest stated.

  • Minister to intervene in $2.4b unsettled forex forward contracts

    Minister to intervene in $2.4b unsettled forex forward contracts

    • Mulls Industrial Revolution Work Group

    The Minister of State, Industry, Trade and Investment, Sen. John Owan Enoh, has pledged to intervene in the manufacturers’ claim of $2.4 billion unsettled foreign exchange (forex) forward contracts.

    The Minister said he will discuss with the Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, with a view to redeeming the $2.4 billion unsettled forex forward contracts.

    He made the pledge yesterday during his ministry’s first stakeholders Town Hall Meeting in Ikeja, Lagos, to mark his inaugural engagement with members and representatives of the Organised Private Sector (OPS).

    The meeting was aimed at fostering more collaboration, promoting inclusivity and initiating transformative conversations to drive Nigeria’s industrial growth.

    Sen. Owan assured manufacturers that as soon as he gets back to Abuja, “I will discuss with the CBN Governor with regards to the $2.4 billion unsettled forex forward contracts.

    “I am going to see the CBN Governor on it, and I will share whatever will be the outcome with the Manufacturers Association of Nigeria (MAN) and the OPS.”

    The Minister was responding to a request by the Director-General of MAN, Segun Ajayi-Kadir, that as part of key actions to revitalize the industrial sector, the Federal Government should ensure the CBN honours all foreign exchange forward contracts backed by compliant trade documents.

    Ajayi-Kadir said redeeming the unsettled $2.4 billion forex forward contract will further increase market confidence and promote Foreign Direct Investment (FDI) inflow.

     Forex forward contracts are financial instruments and are globally practiced to enable businesses to hedge against exchange rate fluctuations by locking in a future exchange rate.

    The CBN traditionally issues these contracts, promising to deliver foreign currency at a specified future date in exchange for upfront naira payment.

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    But, the apex bank was said to have announced its inability to honour the $2.4 billion worth of forward contracts, citing an ongoing investigation by the Economic and Financial Crimes Commission (EFCC) into some foreign exchange transactions.

    However, CBN’s explanation did not sway manufacturers, with Ajayi-Kadir noting that no clear allegations or infractions have been communicated to any of MAN members and none have been indicted for any infractions.

    He said it was expedient to note that many businesses borrowed money from banks for working capital that was used by the banks to open clean line for letter of credit for the companies based on the allocated forward contract from the CBN.

    The MAN DG, in his presentation on the state of Nigeria’s industrial sector, also urged government to “Intensify all measures to boost the level of liquidity and degree of transparency in the official forex window.”

    Other recommendations he put forward to revitalize the industrial sector include enforcing compliance with existing mandatory standards on imported goods; compelling all Ministries, Departments and Agencies (MDAs) and government institutions to patronise locally produced goods for all government contracts and purchases in compliance with all relevant legislation and Presidential Executive Orders.

    He also urged governments at all levels to overhaul the existing educational curricula to emphasise skill acquisition and provide adequate support for innovation in local production processes.

    MAN also called on the Federal Government to intensify effort towards upscaling raw material development and utilization and also ensure effective implementation of all frameworks for improving “Ease of doing business” and protecting local manufacturers.

    Ajayi-Kadir also said the government should improve its strategies on tackling insecurity in Nigeria, particularly in the North east where MAN, according to him, has lost 50 per cent of its members due to insecurity.

    The MAN DG emphasised that addressing the manufacturing sector’s challenges was imperative because manufacturing is the backbone of the industrial sector.

    He said at 46.5 per cent of industrial output, the manufacturing sector remains the leading contributor to the industrial sector.

    “Despite inherent challenges, Nigeria’s industrial value added of $118.22 billion in 2023 ranked second in Africa, all thanks to a resilient manufacturing sector which accounted for $55.74 billon.

    “Clearly, manufacturing is the most vibrant sector of any industrialized economy, considering its cross-cutting linkages with all other sectors. Indeed, no economy has developed without the formidable role of manufacturing,” he stated.

    Ajayi-Kadir said: “If prioritized, Nigerian manufacturing can generate a minimum of $6.72 billion of foreign exchange and contribute over 80 per cent of non-oil exports.

    “Therefore, the structural change engendered by higher value-added manufacturing operations is the essential route for our economy to achieve higher income level and better quality of life for Nigerians.”

    Earlier in his welcome address, Chairman of the Organised Private Sector in Nigeria (OPSN), Otunba Francis Meshioye, said the importance of the industrial sector cannot be overemphasized.

    He said as a catalyst for sustainable economic growth, the industrial sector is a core enabler of the economic development of any economy.

    “No other sector plays a more critical role in technological advancement, productivity growth, skill improvement, job creation and innovation.

    “There is no doubt that its inter-sectoral linkages provide us with the fastest opportunity to achieve our economic aspirations,” Meshioye, who doubles as MAN President, said.

    He expressed OPSN’s commitment to working collaboratively with the Ministry “to develop and implement policies that would fast-track industrial growth, increase productivity and create jobs.”

    He added that the OPSN remains open to establishing a regular dialogue mechanism for reassessment of existing policies and facilitation of possible redesign of some to achieve desired results.

    The OPSN Chair expressed optimism that the Minister’s strategic leadership and collaboration with the private sector will facilitate the much-needed improvement in the industrial sector’s performance.

    He expressed hope that this special advocacy and interactive session between the government and private sector will be on a continuous basis and eventually serve as an avenue for meaningful and result-oriented relationships.

    The highpoint of the Meeting was the Minister’s announcement of his plans to put in place an Industrial Revolution Work Group, a multi-stakeholder group that will have him and the MAN President, Meshioye, as co-Chairs.

    He explained that membership of the Industrial Revolution Work Group will cut across various strategic players in the industrial sector, and is charged with making sure that recommendations made at sessions between the government and the private sector, which will be quarterly, work to achieve the desired results.

    “This industrial sector is unique because of the kind of players that it has like the President of MAN and Chairman of the OPS; they need to be part of the actions to get things to work, and I think that that Work Group is going to be responsible for all of that.

    “I have already announced that these sessions will be regular. So, when we meet at these sessions, one of the things that will take place is the work of this Work Group,” Sen. Owan said, promising to set machinery in motion to put the Group in place as soon as he gets back to Abuja.

    Members and representatives of the Organised Private Sector (OPS) present at the Town Hall Meeting include those of Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Nigerian Association of Small Scale Industrialists (NASSI), Nigeria Association of Small and Medium Enterprises (NASME), Nigeria Employers’ Consultative Association (NECA).

    Others include the Permanent Secretary, Federal Ministry of Industry, Trade and Investment, Amb. Nuru Abba Rimi; and Director General, Raw Materials Research and Development Council (RMRDC), Prof. Nnanyelugo Ike-Muonso, among others.

  • Issuing houses: Forex reforms facilitated more foreign investments

    Issuing houses: Forex reforms facilitated more foreign investments

    The reforms in the foreign exchange (forex) market have significantly improved valuation transparency in companies and enabled more foreign investors to invest in the economy, President, Association of Issuing Houses of Nigeria, ‘Kemi Awodein, has said.

    Speaking during the AIHN Annual General Meeting, in Lagos, she explained that the several successful transactions facilitated within the year, including Heineken’s $24 billion acquisition of a controlling stake in Nigerian Breweries and Sahara Group’s $1 billion purchase of Eabin Power, were boosted by the Forex reforms.

     “These deals were facilitated by the restructuring of the FX market, which improved valuation transparency for foreign investors,” she said.

    Awodein said the ongoing recapitalisation of banks, “has also supported growth in the equities market, which is a good development for the economy.”

    She said that in 2023, the Nigerian investment banking sector saw significant developments influenced by key economic reforms, particularly the removal of fuel subsidies and the unification of the exchange rate.

    These reforms had a profound impact on the overall financial landscape, enhancing foreign investor confidence and increasing liquidity in the market. These reforms, alongside broader macroeconomic adjustments, have shaped investment banking strategies, enabling new opportunities in capital raising and mergers and acquisition activities.

     “The prominent transactions are Seplat Energy’s $650m bond issuance, aimed at expanding its energy operations, and Airtel Africa’s $500m capital raise, which was used to enhance telecommunications infrastructure. ‘‘These initiatives were made more feasible by the improved economic environment following the reforms,” the AIHN president said.

    He added that the programme provided opportunity for the AIHN executives and members to receive the association’s audited financial statements for the year ended December 31, 2023, together with reports of directors and auditors, re-appoint auditors, authorise the directors to fix renumeration of auditors, and elect Taiwo Olatunji as the Secretary of Treasury.

    Read Also: Illegal forex, a threat to Naira stability – Ex-APC South Africa Chairman

    The account statement showed the association recorded N86.56 million income in 2023 financial year, an improvement from N85.41 million it achieved in the corresponding period of 2022.

    All the executive committee members – Dr Gbadebo Adenrele (Vice President), Alhassan Gwarzo (Secretary of Finance), Abimbola Kasim (former Secretary of Treasury), Mrs. Onyebuchim Obiyemi (Secretary of Administration), and Chidi Iwuchukwu (Secretary of Publicity) – were present.

    According to her, improvements in transaction processing and time-to-market cannot be overemphasised and represent positive developments in the market.

    Foreign portfolio investors are focused on the currently elevated effective yields on Treasury Bills and Commercial Paper at the expense of locking in returns on government bonds for a more extended period.

    She disclosed that in first half of this year, the Nigeria Exchange Limited’s (‘NGX’s”) All-Share Index (“ASI) recorded an impressive return of 33.8 per cent, materially outperforming its African peers (Ghana Stock Exchange: +22.3 per cent; Nairobi Exchange: +18.9 per cent; Uganda Stock Exchange: 17.9 per cent; to mention a few).

     “The market’s bullish run was buoyed by a confluence of factors, including robust corporate earnings, dividend declarations, and a heightened interest from both domestic and foreign investors.

     “ Noteworthy are the listing of the Nigeria Infrastructure Debt Fund and Transpower, which significantly boosted market capitalisation on NGX positive market sentiment and was recorded across respective sectoral indices in first half of 2024,” Awodein said.

    She also said that in the second half of 2024, “the anticipated drivers of the equities market are banking sector recapitalisation activities, completion of the Dangote Refinery, corporate actions, and the potential return of foreign portfolio investors (FPIs).”

    Awodein said, “The banking recapitalisation has invariably created an opportunity for the growth of real investment and a deeper capital market. I look forward to furthering our discussions with other strategic market stakeholders such as the Central Bank of Nigeria, the Nigerian Exchange Limited, NASD Plc, Central Securities Clearing System, FMDQ Plc as well as other capital market trade groups.”

    She added, “I am confident that constructive engagements will result in an upsurge in issuer interest and ultimately contribute to the deepening of the Nigerian capital market.”