The announcement of the award of National Honour on the Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, raised interest at the money market last week. Dealing banks, traders as well as investors in the market, local and international, were concerned about the implication of the recognition on the current state of the market in the medium and long-term.

Although cost of funds remains high in the money market, THISDAY investigations revealed that some banks have actually cut their lending rates significantly to make it easy for big corporations to access funds, hitherto starched in their coffers.The big corporates, mainly the prime customers of the banks with thriving businesses in the food sector, manufacturing and processing, telecommunications and services among others, are accessing credit from banks at rates in the region of 11 per cent per annum, which is quite low compared to average maximum lending rate in the market at over 20 per cent.

A treasury with one of the banks explained: “There is no high risk premium on the transactions, unlike when lending to other customers of the bank.” He added: “These are people and organisations that the banks have been dealing with, have come to understand their businesses and can predict the future. Remember that the operating business environment in Nigeria is difficult and so when a customer comes to the bank to borrow money, he doesn’t just have to contend with the cost of the funds to the bank but the risks associated with his business, since a bank puts all that into consideration before arriving at the interest rate” he said.

The Central Bank of Nigeria (CBN) noted at the end of its monetary policy committee meeting last week that developments in interest rates structure indicated that the retail lending rates were still relatively high even though they were declining.According to the Committee, average maximum lending rate dropped to 22.56 per cent in May 2010, from 23.45 per cent in December, 2009. Also, average prime lending rate fell to 18.77 per cent in May 2010, from 19.03 per cent in December 2009.The result of trading activities at the inter-bank money market showed Nigerian Inter-bank Offer Rates (NIBOR), which had remained at about 1 to 2 per cent increasing last week.

The inter-bank lending rates rose to 8.25 per cent on average from 2 per cent the previous week after NNPC caused a major outflow, by withdrawing about N100 billion from the system. There was outflow to foreign exchange and fixed income securities purchases. There was also a dry up of the fiscal inflow in the system, both factors causing the rates to rise, one of the traders said.The NNPC reportedly sold about $600 million to some banks in the last two weeks and recalled part of the naira proceeds to its CBN account last week in compliance with CBN’s monetary control measures.

At the foreign exchange market, the naira, which gained 5 kobo at the first bi-weekly auction last Monday lost the 5 kobo at the second auction (last Wednesday) to exchange N148.50/$1. At the inter-bank market, the naira eased to N150.22 to the dollar from 149.70, which ended its two-week rally against the dollar.

Interest, Lending, Inter-bank, Securities Trading

As stated earlier, the big corporates majorly – the prime customers of banks with thriving businesses in the food sector, manufacturing and processing, telecommunications and services among others are accessing credit from banks at rates in the region of 11 per cent per annum, which is quite low compared to average maximum lending rate in the market at over 20 per cent. But lending rate to the private sector remains high, with the flow of credit falling to the very low levels.

The CBN in its market and economy review last week noted that as at May, 2010 aggregate domestic credit (net) grew by 12.38 per cent over the December 2009 level, and by 29.72 per cent when annualised, which was still below the 2010 indicative target of 55.54 per cent. Credit to government (net), which grew substantially by 50.87 per cent over end-December 2009 (or 122.1 per cent on annualised basis), was the major contributor. Credit to the private sector declined by 1.88 per cent (or 4.51 per cent on annualided basis), in contrast to the growth benchmark of 31.54 per cent for 2010.

The CBN further disclosed that the substantial growth of credit to government (net) against the backdrop of declining private sector credit reflected the risk aversion of banks to lending to non-government borrowers, adding that the “Committee believes that in order to provide the private sector with the necessary credit to grow the economy, further efforts are needed to unlock the credit market in order to enhance the flow of credit to the real economy.

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Canada’s dollar dropped by the most in almost three months as oil fell and a report showed consumer prices rose less last month than forecast, reducing the chance the central bank will raise rates before the second half.

The currency declined for a second day, touching the lowest level in more than two weeks, as stocks fell and the U.S. dollar rose against all of its major counterparts. Canadian government bonds climbed.

“The numbers are suggesting people are getting nervous,” said David Watt, senior currency strategist in Toronto at Royal Bank of Canada, the nation’s biggest lender. “The Bank of Canada is heading to a tightening campaign in the third quarter now the debate is will they go in July or September.”

The Canadian currency, nicknamed the loonie, depreciated 1.6 percent to C$1.0479 per U.S. dollar at 12:10 p.m. in Toronto, from C$1.0314 yesterday. It dropped as much as 1.7 percent, the most on an intraday basis since Oct. 30, to touch C$1.0489, the weakest level since Jan. 4. One Canadian dollar buys 95.43 U.S. cents.

The consumer price index rose 1.3 percent in December from a year earlier after gaining 1 percent in the previous month, Statistics Canada said today in Ottawa. The median forecast of 26 economists in a Bloomberg News survey was for a 1.6 percent gain. Core inflation, which excludes energy and food, was unchanged at an annualized 1.5 percent, less than forecast. The Bank of Canada’s inflation target is 2 percent.

U.S. Dollar Strength
The greenback gained against all 16 of its most-traded counterparts tracked by Bloomberg. The Canadian currency fell against 12.

“The soft CPI numbers were somewhat of a catalyst for the price action, but the U.S. dollar has been strong across the board, which means weakness for Canada, the other commodity currencies and the euro,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto.

Crude oil for February delivery dropped 2.4 percent to $77.12 a barrel on the New York Mercantile Exchange. Raw materials generate half of Canada’s export revenue, and crude is the nation’s biggest export. Stocks fell, with the Standard & Poor’s 500 Index plunging 1.6 percent.

The yield on Canada’s two-year note tumbled as much as eight basis points, or 0.08 percentage point, to touch 1.19 percent, the lowest level since Dec. 8, before trading at 1.2 percent. The price of the 1.25 percent security maturing in December 2011 rose 11 cents to C$100.10. The benchmark 10-year note’s yield fell as much as seven basis points to 3.41 percent, the lowest since Dec. 18.

Validates Rate Decision
The lack of change in the core consumer-price data today “validates the central bank’s decision to keep interest rates at rock-bottom levels,” Erin Weir, an economist for the United Steelworkers union in Toronto, wrote in a note. “The prospect of having to raise rates to quell inflation is far away.”

Canada’s central bank held the benchmark overnight lending rate at a record low 0.25 percent yesterday. Policy makers reiterated they will keep the rate there through June, barring a change in the inflation outlook, and repeated that the Canadian currency’s “persistent strength” hampers economic recovery.

The benchmark lending rate was 4.5 percent when the bank began cutting it in December 2007.

Currency traders are betting which countries will raise interest rates as the global economy shows signs of emerging from the worst recession in more than half a century. Investors tend to favor the currencies of nations whose borrowing costs are rising because yields are higher.

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Firms today face a challenging global foreign exchange (FX) market environment that remains fragmented and extremely competitive. All market participants – buy-side firms in particular – are under increased pressure to pursue best execution and reduce trading costs.

Electronic trading in the FX market continues to grow at a staggering pace. According to Greenwich Associates report “Electronic Foreign Exchange: Booming in Crisis,” published in March 2009, the 37 percent rate at which electronic FX trading increased last year was almost triple the 13 percent year-over-year increase in total FX trading volume. Over the same time period, the proportion of global FX trading conducted on electronic platforms jumped from 44 percent to 53 percent.

So what is wrong with this picture In short, the market has reached an inflection point where the very technology that helped fuel this growth is becoming outdated. Traditional FX trading solutions single-dealer platforms and multi-bank (electronic communication networks) ECNs can no longer meet the needs of sophisticated institutional traders. Unfortunately, the challenges that firms face extend well beyond the front office.

Companies are under tremendous pressure to minimize trading costs and increase operational efficiencies firm-wide. As such, the challenges facing firms today is twofold: deploy advanced technology that will allow FX traders to navigate – and exploit – today’s complex marketplace, but do so with an eye towards long-term value and scalability.

The question, then, is what constitutes “advanced trading technology” in the world of FX. To answer that, first consider the limitation of traditional FX platforms.

Single-Dealer Execution Platforms. All leading FX dealers maintain such platforms, based on a fairly standardized ASP or software as a service (SaaS) model. Yet leading institutions and hedge funds can have relationships with as many as seven or eight different FX dealers, which introduces numerous trading and workflow challenges.

First and foremost, single-dealer platforms provide liquidity from only one source, limiting price discovery. Using multiple-dealer platforms to try solving this problem leads to troubles in both the front and back offices (e.g. desktop issues and a tangle of independent workflow connections). In addition, the SaaS model these platforms are based on means they cannot be customized to meet client-specific trading or integration requests.

ECNs. What about anonymous electronic communication networks (ECNs)” Don’t they address the shortcomings of single-dealer platforms by aggregating liquidity from numerous sources” To a certain extent, they do. However, ECNs also rely on a model that does not address the importance of dealer-client relationships.

FX remains a highly fragmented over-the-counter (OTC) market. Dealers are still the primary source of FX liquidity, and the pricing and size they offer is counterparty-specific (based on a client’s credit, trading history, etc.).?? In an anonymous ECN model, banks and other liquidity providers do not know who the potential counterparty is. To mitigate their risk, they offer limited size and “one size fits all” pricing that might be markedly different from what a client would receive under a disclosed trading model.

For the buy-side, the challenge is how to combine the benefits of single-dealer platforms and ECNs in a single trading system.?? In response, firms are increasingly turning to advanced, broker-neutral platforms that can give clients the best of both worlds?? consolidated liquidity and optimal pricing.?? In this model, traders can view and act on direct, streaming liquidity from every provider with whom they have a relationship?? banks, dealers and ECNs in a single, highly customizable trading interface.

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last night, the central bank announced that from June 5 yuan from financial institutions to raise the deposit reserve ratio by 0.5 percentage points. From May 19 yuan from financial institutions raised benchmark deposit and lending interest rates. Analysis of Shanghai researcher points out that this is the last 10 years the first time also announced that raising the deposit reserve rate and the benchmark deposit and lending interest rates. Shows that the management tried to reduce market risk, and resolve the determination of a speculative bubble. This is for real estate loans has little effect on the insurance industry and good.

The first time the five-year deposit interest rate increases 0.54
banks face earnings pressure
It is worth noting that this at the central bank announced that financial institutions in the five-year benchmark deposit interest rates 0.54 percentage points, and contrast, the five-year benchmark lending rate 0.09 percentage point hike alone. Personal housing accumulation fund the five-year loan rate was only 0.09 percentage points adjusted upwards accordingly.

In this regard, the Central Plains Analysis Securities researcher said, “This is the profitability of the mainland banking sector will constitute the new pressures. Prior to China’s deposit and lending rates increase in the basic, as adjusted and the bank to pay interest on deposits has improved significantly, while the lending interest rate to accelerate the decline in access. This has always been dependent on income spreads most commercial banks, will have a negative impact. “It is understood that this adjustment, the long-term deposit, loan spreads at 2.25, while the original rate of 2.7, reduced 0.45 points to reach 17% decline.

At the same time, Lyon, a researcher at that “interest rate increase the profitability of insurance companies for the mainland to form good, because the current structure of insurance assets ratio of more than 20% for bank deposits. Research data indicate that rising interest rates 0.27 basis points each, life insurance companies and other large stock price is expected to be up 5 percent support. ”

Short-term lending rates higher than long-term
curb excessive speculation
At the same time, the adjustment of short-term Loan interest rates range, significantly higher than long-term. Galaxy Securities analyst Gao Xiaofeng analysis, “the original short-term lending rates relatively low, since the first quarter of this year, subject to hot pursuit, this part of the funds into the stock market. The encounter marked increase, which would lead banks to tighten short-term loans due in order to market liquidity will gradually shrink, but it also requires a process will have obvious market reaction. ”

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Why are financial institutions monitoring the price trends of the foreign exchange market so closely? What is their objective? Why should you be concerned and how does this impact your portfolio? Are there trading opportunities that you should consider? How do options fit into FX trading? I will attempt to answer all of these commonly asked questions, as well as why investors need to start educating themselves about the foreign exchange market.

The foreign exchange market has had an evergrowing influence on the equity, bond, commodity and real estate markets, having changed dramatically since the advent of free-floating currencies in 1971. This change was brought on by the explosive growth of globalization and technology, impacting every individual worldwide. Goods are now manufactured across the globe. Is this a positive or negative development? Unfortunately, it is not that clear-cut. It is most likely a mix of both, since as with many opportunities in life, there is usually a trade-off. Consumers may receive lower prices for their goods, but displaced workers in higher cost countries/regions may feel the adverse impact. The foreign exchange market is responsible for pricing the currencies involved in these international business transactions. This market is ultimately determined by supply and demand. The FX market is just a formal mechanism for finding price equilibrium, each day, for buyers and sellers of the respective currency pairs. Technological advances have extended the transparency of the market as well as the reach of the market to many new participants. This transparency has increased the integrity of the market by giving participants confidence in the foreign currency market. The FX market price has an enormous impact on the international business community.

To gain additional perspective on today’s foreign exchange market; let’s look at the past. Back in the early 1970′s, the Nixon Administration was faced with some very tough decisions. The Vietnam War and an economic slowdown in the U.S economy created a difficult monetary and fiscal situation. Inflation started to heat up creating a highly precarious position for the United States. The U.S. was forced to abandon the gold standard, whereby U.S. dollars were readily transferable into a fixed amount of gold. Up until 1944, the U.S. dollar was fixed at a price of $20.00 to one ounce of gold. That price was subsequently increased to $35.00 per ounce after 1944. By the end of the 1960′s, the U.S. was under pressure to devalue the USD once again due the decreasing demand for U.S currency.

The U.S. was forced to abandon the gold standard in 1971, ending the dollar-gold convertibility. The official gold price was raised to $38 in 1972. By 1974, gold soared from the previously fixed price of $38.00 to $195.00. By releasing the fixed price of dollars to gold this inevitably led to the floating of the world’s currencies relative to each other. This was the very beginning of the currency market as we know today.

As the US dollar floated, investors began to consider other alternatives than just keeping all of their savings in US dollar investments. For additional perspective, let’s take a look at the US dollar over the last 36 years from 1944 and to today. In 1972, $1 could be converted to gold at $38 per ounce. Today (August 2008), 1 ounce of gold costs approximately $800. Using a compound growth rate calculator, gold has increased at an annual compounded growth rate during the period of 1972-2008 of 8.83%. Conversely, the US dollar has fallen by 8.83% per annum during that period relative to the price of an ounce of gold. We, should be concerned with this dollar devaluation and consider the implications for our own portfolios.

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It doesn’t matter what medium you are using to get your financial news, one thing has been fairly consistent-extensive coverage of the US dollar. Whether you are on your favorite financial website, blog, newspaper or television channel, you have most likely stumbled across headlines saying: US dollar rallying, US dollar slumping or US dollar holding steady. The foreign exchange market was created as a mechanism to facilitate global trade; it is a relative market. For example, currencies trade in pairs; therefore, you need to have two views, a bullish view on one currency and a bearish view on the opposing currency.

Not only has there been more coverage on the FX market lately, but due to recent technology advancements, the market is much more accessible and transparent these days. Decades ago, foreign exchange trading was done primarily by large banks and other financial institutions. Today, retail investors easily and openly participate in the foreign exchange market. One relatively new development is the introduction of exchange-listed foreign exchange options. The International Securities Exchange (ISE) now offers options trading in six currencies relative to the United States dollar, providing investment opportunities for any market condition. What are the differences between spot FX trading and trading listed ISE FX Options? I will examine these differences and provide some deeper insight into the benefits of ISE FX Options.

In order to decide whether this is the right investment class, you probably want to answer a few questions first: What are options? With options you have more choices and increased flexibility when selecting your foreign exchange trading strategy. Options allow you to trade in view of your own unique risk/reward tradeoffs. How can I understand all of the terminology required? There are rights, obligations, premiums, strike price, intrinsic value, expiration, calls and puts and settlement process, to name just a few. These terms may seem a little intimidating, but it is worth spending even just a small amount of time learning some of the options jargon.

The US listed equity options market has existed for over 35 years. ISE is the world’s largest equity options exchange and the first fully electronic options exchange (launched in 2000). Experienced equity options investors have learned that the options market offers another dimension of choices. ISE currently trades equity, Exchange Traded Fund (ETF), index and foreign currency options. The exchange is regulated by the Securities and Exchange Commission, which means the FX Options can be traded from an options-enabled brokerage account. One major difference between the spot FX market and ISE FX Options is that the ISE does not hold your trading account. ISE’s markets were built with a market maker mode; market makers are assigned different trading instruments where they are responsible for providing ample liquidity each and every trading day; thus increasing the integrity of the market. ISE has created very liquid markets with complete transparency for all market participants.

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SOUTH AFRICAN RAND FOREX
The Fed on reduced its business forex online trading benchmark interest rate virtually to zero and said that it would pour money into the economy through an array of new lending forex programs. It has also dropped further below the European Central Bank benchmark rate of 2.5 percent and the Bank of England 2 percent. Wall Street Lower a Day After Rate Cut Wall Street pared some gains morning after soaring a day earlier in response to the Federal Reserve decision to cut interest rates to historic lows of zero to 0.25 percent forex

Well, I am going to dispel those myths forex online true right now. Financial stocks, the leaders on tugged stock markets down on morning after posted a $2.36 billion loss for the fourth quarter, reminding investors that banking and investment institutions were still hurting from the country foreign exchange financial and credit crises. On the dollar fell to its lowest against the yen since August 1995. After 10 a.m., the Dow Jones industrial average was down 121 points and the broader Standard & Poor index of 500 stocks was down 1.6 percent as investors cashed forex charts online their profits from 5 percent rally.

That’s currency market almost never the jess. 2) They forex broker scalping started with more money. 1) They are a lot smarter than the rest of us.

The dollar fell to $1.1155 Swiss francs from 1.1236. I know in this day and age of thousand dollar charting platforms, its easy to think forex currency trading that. It really doesn’t matter what they use. This is by far the biggest myth.

In European morning trading, the dollar was at 88.43 yen, down from 89.06 late in New York. 3) They use the most expensive trading software. But it has absolutely no bearing as to the success online forex exchange one has in trading. In early afternoon forex trading signals trading, shares in the major European exchanges were slightly lower.

The have nots look at the haves and wonder what in the world are they doing to be this successful. Here are the top 3 myths about people that make money trading forex. The Tokyo benchmark forex signal software review Nikkei 225 stock average rose 0.5 percent, while the S&P/ASX 200 in Sydney gained 0.4 percent. Oil futures in New York fell 24 cents, to $43.36 a barrel, and are down by more than two-thirds from a July high above $145 a barrel. They usually put these myths forex brokers in their head as to how they do it. Gino Jolly contributed reporting.. The Hang Seng money market index in Hong Kong added 2.2 percent, while the Shanghai Stock Exchange composite index luise 0.1 percent.

They know that it isn’t the equipment that makes the money, its the trader. And the plummeting yield the benchmark 10-year Treasury note hit lows forex trading signals of 2.11 percent as investors bet that interest rates would remain exceptionally low, as the Fed put it on for the foreseeable future. But the fed funds rate has now fallen global forex trading review below the Bank of Japan overnight rate the first time that has happened since January 1993.

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