The Nation Newspaper

Tag: weakens

  • CBN weakens naira on spot market

    The Central Bank of Nigeria (CBN) yesterday sold dollars at N306 for the second after maintaining a level around N305 on the official spot market for two months, traders said.

    The move was minor, to signal a change in foreign exchange policy, traders said. The bank last sold dollars at N306 on the spot market in September and had sold the currency as low as N306.65 in July.

    Dollar shortages gripped the economy as crude sales, Nigeria’s mainstay, plunged at the start of an oil price rout in 2014. That triggered a recession last year and frustrated businesses, which had to find dollars on the black market as a result.

    To try to resolve the currency crisis, the OPEC member state has set up at least different six exchange rates, after devaluing the currency for retail users in February and allowing foreign investors to trade the naira at market-determined rates.

    Subsequently, the bank has been intervening with dollar sales almost daily on the spot and forward markets. It sold $500,000 on the spot market on Tuesday, traders said.

  • Global demand growth for fuel weakens, says IEA

    Global demand growth for fuel weakens, says IEA

    GLobal demand growth for fuel has weakened, the International Energy Agency (IEA) has  said.

    The agency warned that the rise in Middle East refining capacity would create huge glut of automotive gas oil or diesel.

    According to the global energy watch dog’s monthly report, IEA forecast that the Middle East’s net oil product exports will reach nearly one million barrels per day (bpd) next year from an average of less than 400,000 bpd last year.

    Newly built mega refineries are coming into production just as demand growth for their core product – diesel – is beginning to fade, which could leave them searching for outlets, the IEA said.

    “The configuration of the plants, designed to maximise diesel production, seems somewhat at odds with market trends that in recent months have shown stronger demand growth for gasoline and jet fuel than for middle distillates,” the agency said in its Oil Market Report.

    The IEA expects ultra low-sulphur diesel and jet fuel production from two newly built Saudi refineries and one in the UAE alone to reach 800,000 bpd, against regional distillate demand growth of less than 100,000 bpd per year in 2014 and 2015.

    “The current economic and oil demand picture is quite different from what was envisaged at the time when they got underway in the mid-2000s,” the report said.

    “Since the financial crisis of 2008 and 2009, the economic slowdown has had a more marked impact on distillate demand than on that for other products, such as gasoline.”

    The 400,000 bpd Jubail  refinery, a  joint venture between Saudi Aramco and France’s Total, reached full production in August and the 400,000 bpd Yanbu refinery, run with China’s Sinopec, is set to start in early 2015. The 420,000 bpd Ruwais refinery in the UAE is targeting an end-of-year startnup.

    But sputtering growth in key growing markets, such as India, Brazil and other Latin American countries, is limiting outlets for diesel, while subsidy cuts in those countries also threatens consumption.

    After India phased in gradual subsidy cuts, demand reversed annual growth that had characterized its distillates markets from the 1970s, and demand shrank from June last year until April this year.

    Even Europe, which is net short of ultra low-sulphur diesel now, and set to become more reliant on imports as regional refineries shut down and cut production, is not the boom market that the refineries hoped for when they were commissioned.

  • Rand weakens to almost 5-year low after China manufacturing data

    South Africa’s rand depreciated to the lowest intraday level since March 2009 against the dollar after measures of Chinese manufacturing fell, pushing emerging-market currencies weaker. Bonds declined.

    A Chinese Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics declined to 50.5 in December from 50.8 the previous month, while a separate gauge compiled by the statistics bureau and logistics federation fell to 51 from 51.4. A reading above 50 signals expansion. China is the biggest buyer of South African raw materials, accounting for about 12 percent of exports, according to government data.

    “Emerging-market currencies are weaker in general on a stronger dollar,” Ion de Vleeschauwer, chief currency dealer at Bidvest Bank Ltd., said by phone from Johannesburg. “Liquidity is thin in the market and moves in the exchange rate are exaggerated.” The rand weakened 1.5 percent to 10.6570 per dollar by 3:42 p.m. in Johannesburg, the worst performer today among 16 major currencies tracked by Bloomberg after the Norwegian krone and the Brazilian real. The yield on benchmark government bonds due December 2026 rose six basis points, or 0.06 percentage point, to 8.31 percent, the highest level on a closing basis since Dec. 6. Foreign investors bought a net 121 million rand ($11 million) of South African bonds on Dec. 31 and sold a net 301 million rand of equities, according to data from the Johannesburg Stock Exchange.

  • Rand weakens to five-year low

    South Africa’s rand depreciated to the lowest intraday level since March 2009 against the dollar after measures of Chinese manufacturing fell, pushing emerging-market currencies weaker. Bonds declined.

    Bloomberg said a Chinese Purchasing Managers’ Index from HSBC Holdings Plc and Market Economics declined to 50.5 in December from 50.8 the previous month, while a separate gauge compiled by the statistics bureau and logistics federation fell to 51 from 51.4. A reading above 50 signals expansion. China is the biggest buyer of South African raw materials, accounting for about 12 percent of exports, according to government data.

    “Emerging-market currencies are weaker in general on a stronger dollar,” Ion de Vleeschauwer, chief currency dealer at Bidvest Bank Ltd., said by phone from Johannesburg. “Liquidity is thin in the market and moves in the exchange rate are exaggerated.”

    The rand weakened 1.5 per cent to 10.6570 per dollar, the worst performer yesterday among 16 major currencies tracked by Bloomberg after the Norwegian krone and the Brazilian real. The yield on benchmark government bonds due December 2026 rose six basis points, or 0.06 percentage point, to 8.31 per cent, the highest level on a closing basis since December 6.

    Foreign investors bought a net 121 million rand ($11 million) of South African bonds on December 31 and sold a net 301 million rand of equities, according to data from the Johannesburg Stock Exchange.