By CentralBankNews.info
Ghana’s central bank held its policy rate steady at 18.0 percent as the February rate rise is still working its way through the economy but raised the cash reserve requirement of banks to 11.0 percent from 9.0 percent to address the overhang of liquidity and revised down the Net Open Position (NOP) limits of banks to improve the supply of foreign exchange on markets.
The Bank of Ghana, which raised its policy rate by 200 basis points in February in response to growing risks to inflation and exchange rate instability, said the single currency NOP limit was cut to 5 percent from 10 percent and the aggregate NOP cut to 10 percent from 20 percent.
“In assessing the outlook for inflation, the Committee noted that inflationary pressures have heightened, driven by period increases in fuel and utility prices, currency depreciation and supply-demand gaps in the general economy,” the central bank said.
Ghana’s headline inflation rate rose to 14.0 percent in February, continuing the rising trend since January 2013, and up from 13.8 percent in January. The central bank targets inflation of 9.5 percent, plus/minus 2 percentage points.
“The risks to inflation remains high,” said the bank, adding that its latest forecasts show that inflation will only return to the target range towards the end of the first half of 2015.
Ghana’s cedi currency, which fell 14.6 percent against the U.S. dollar in 2013, remains under pressure due to a wide current account deficit, fiscal imbalances and weak growth. In the first quarter of this year, the central bank said the cedi was down 17.6 percent against the dollar compared with a 1.1 percent decline in the first quarter of 2013. Today the cedi was trading at 2.68 to the dollar.
“Since the last MPC round, pressures observed from the exchange rate depreciation, fiscal strains and the pass through effects of fuel and utility price adjustments have persisted, heightening inflation expectations,” the bank said.
In addition to raising its policy rate, the central bank in February also issued new foreign exchange regulations that it said had helped “to some extent” to slow down the pace of depreciation.
Ghana’s economic growth is expected to remain below par this year, reflecting the lingering impact of last year’s disruptions to the energy sector, falling gold production and prices. The central bank said it was also concerned about waning consumer and business sentiment and tightened credit conditions.
Ghana’s Gross Domestic Product expanded by 0.5 percent in that third quarter of 2013 from the second quarter for annual growth of only 0.3 percent, down from 6.1 percent in the second quarter.
In February the International Monetary Fund estimated 2013 growth of 5.5 percent, well below an average 7 percent growth seen from 2001 to 2012.
“The strict adherence to 2014 budgetary estimates is critical for macroeconomic stability,” the bank said, saying a lower deficit would create space for development spending, reduce borrowing and pressure on interest rates, helping boost international confidence and encourage capital inflows.
Revenue shortfalls, higher wage bills and interest rate costs boosted the 2013 fiscal deficit to an estimated 10.8 percent of GDP compared with a target of 9.0 percent and the 2012 deficit of 11.8 percent. The deficit was mainly financed by domestic sources.
Provisional data for January and February show a budget deficit of 1.8 percent, down from 2.7 percent in the same 2013 period, with government spending at 4.1 percent of GDP, below the 5.0 percent seen last year.
The large fiscal deficit contributed to a widening of the current account deficit to 13 percent of GDP, or US$ 5.7 billion in 2013 from $4.9 billion in 2012, and to further pressure on international reservers.
As of March 28, Ghana’s gross international reserves were estimated at $4.7 billion, down from $5.6 billion and the end of 2013, representing 2.6 months of import cover.
Monetary aggregates show increased liquidity, reflected in higher currency in circulation and demand deposits, with the pace of growth in private sector credit steady at an annual 33.0 percent at the end of February. The ratio of non-performing loans in the banking sector eased to 12.7 percent in February from 13.5 percent in February 2013, while money market rates have trended up with 1-year notes up to 22.5 percent in February from 17 percent in December, reflecting the higher policy rate.
The only bright spot identified by the central bank was an expected improvement in the global economy that could improve commodity prices.
“While gold and oil revenues may be flat, cocoa revenue is expected to improve,” the bank said, adding that cocoa prices are projected to rise to $3,200 per tone by the end of this year from the current price of $2,955.
The prices of Ghana’s two major exports, cocoa and gold, have declined since 2011.
On the other hand, the bank said the prospects of faster tapering by the U.S. Federal Reserve coupled with evidence of slowdown in China and geo-political tensions from Ukraine could pose challenges to the global economic outlook.
Crude Futures Drops Before US Stockpiles Report
Crude oil prices were seen falling on Wednesday, following the previous drop of 2% dragged by the news that the Libyan rebels said that they agreed to re-open vital ports in the country. Meanwhile oil traders are awaiting data on the US stockpiles for the last week from the Energy Information Administration.
Futures for the West Texas Intermediate (WTI) for May delivery dropped 0.12% to $99.63 a barrel on the New York Mercantile Exchange at the time of writing. Brent crude futures for May settlement remained flat at $105.63 a barrel on the ICE Futures Europe exchange at the same time.
The European benchmark Brent crude was at a premium of $5.88 to WTI, after closing at $6.18 on Tuesday.
In Libya, the rebels announced their agreement with the government to re-open vital ports, which would end the eight-month deadlock that have been harming the nation’s income, according to reports from Reuters.
Crude Supplies
Investors awaits fresh data on crude stockpiles from the US Energy Information Administration (EIA), as analysts expects the report to show an increase in crude stockpiles by 2.5 million barrels in the previous week, following the climb of 6.6 million barrels a week earlier.
Distillate inventories are expected to have dropped by 300,000 barrels last week.
On Tuesday, the American Petroleum Institute (API) confirmed crude stockpiles declined by 5.8 million barrels in the week ending March 28 to 373.5 million barrels, compared to analysts’ forecasts of a rise by 1.1 million barrels.
According to the reports from API, crude stocks at Cushing, Oklahoma dropped by 1.5 million barrels, while gasoline inventories rose.
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The post Crude Futures Drops Before US Stockpiles Report appeared first on | HY Markets Official blog.
Article provided by HY Markets Forex Blog
Copper Climbs amid Chile Earthquake Worries
Copper prices were seen climbing on Wednesday, rising towards a three-week high as worries over supplies could have dropped following Tuesday’s earthquake in Chile, the world’s largest producer of metal. However, some mining companies said their sites suffered no damage.
The three-month copper contract edged 0.5% higher to $6,694 a metric ton on the Metal Exchange at the time of writing. Copper settlement for May climbed 0.7% higher to $3.055 a pound on the Comex in New York at the time of writing.
Copper – Chile Earthquake
On Tuesday, Chile, the world largest producer of copper which provides a third of the world supply of the metal; was struck by an earthquake of magnitude 8.2 off the coast from the city of Iquique and near the Peruvian boarder, according to the US Geological Survey.
The mining port of Iquique is part of Chile’s key-exporting port. Some of the key mining firms in the country confirmed that there was so damage to their sites.
“So far, however, there have been no reports of any damage, and some mining companies have already sounded the all-clear,” analysts at Commerzbank Corporates & Markets reported.
The state-owned mining firm, Codelco said there was no harm to its workers or mine, while BHP Billiton said it evacuated the Coloso port following the government tsunami warning.
Producers from Teck Resources and Pan Pacific Copper Co. also confirmed that there were no harm or damage by the earthquake but were also forced to evacuate the coastal areas.
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Silver eyes $20.60 as triangle formation breaks
After Silver broke below the $20.00 mark and 61.8% retracement level between $18.64 and $22.16, the bearish swings slowed down and eventually stopped altogether. The last four business days have formed a range in the shape of a triangle formation.
The resistance of the triangle was confirmed by the 200 Moving Average on 1H and the 50 Moving Average on 4H timeframe. The triangle break-out and the move back above the $20.00 level indicates Silver will be searching for a lower high in the coming days.
Silver’s search for a high should lead towards $20.55/60, where buyers will find the first resistance in a confluence between the 38.2% Fibonacci retracement and a price pivot zone from March.
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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets
USDCAD: Vulnerable But Holds Above The 1.0000/1
USDCAD: With USDCAD continuing to hold above the 1.0000/1 levels, we look for it to trigger a recovery higher following its recent weakness. Support comes in at the 1.1000/1 levels where bulls may come in and push it higher but if violated further weakness could occur towards the 1.0950 level. Further down, support is located at the 1.0909 level. On the other, we expect a recovery higher to occur following its ability to hold above the 1.0000/1 levels. If this occurs expect the pair to strengthen further towards the 1.1100 level where a break will aim at the 1.1168 level and then the 1.1200 level. Further out, resistance resides at the 1.1277 level where a break will resume its broader uptrend. This if seen will pave the way for a run at the 1.1300 level. All in all, USDCAD faces further downside pressure but correction may occur.
Article by www.fxtechstrategy.com
Uganda holds rate, sees lower short-term inflation
By CentralBankNews.info
Uganda’s central bank maintained its Central Bank Rate (CBR) at 11.5 percent, saying its neutral policy stance is warranted given its current projections for inflation and economic growth.
The Bank of Uganda (BOU), which last cut its rate by 50 basis points in December for a net 50 point reduction in 2013, revised downward its forecast for core inflation to 4-5 percent over the next few months from February’s forecast of 5-6 percent in the first half of the year after headline and core inflation eased in February due to a strengthening of the exchange rate.
But over the next 12 months, the BOU still sees core inflation rising to between 5.5 and 6.5 percent and cited potential risks of stronger inflation from a deprecation of the exchange rate, stronger domestic demand from the fiscal sector and higher food prices due to drought and regional food shortfalls.
“The magnitude and timing of possible declines in foreign aid are also a source of uncertainty for the balance of payments and the economy,” the BOU said.
In its monetary policy statement, the BOU referred to a decline in February headline inflation to 6.7 percent from 6.9 percent in January while core inflation fell to 3.7 percent from 4.6 percent.
But on Monday the bank said, citing Uganda’s statistics bureau, headline inflation rose to 7.1 percent in March from a revised 6.8 percent in February while core inflation fell to 3.7 percent in March from a revised 3.9 percent in February.
The BOU targets core inflation of 5.0 percent.
Uganda’s shilling appreciated by 6.2 percent in 2013 but since late February it has declined, trading at 2,545 to the U.S. dollar today compared with 2,525 at the end of 2013.
The bank said economic growth in the current 2013/14 fiscal year, which ends on June 30, is still projected to be relatively buoyant, supported by fiscal stimulus, a stronger global environment, strong inflows of foreign direct investment and household consumption. However, it said weak bank credit growth posed a risk to this outlook.
The BOU has forecast growth of 6.0-6.5 percent in the current fiscal year.
Uganda’s Gross Domestic Product contracted by 0.6 percent in the third calendar quarter from the second quarter for annual growth of 2.2 percent, down from 5.8 percent in the second quarter.
Things That Make You Go Hmmm: Fight Club
Sometimes the sand shifts beneath your feet without your realizing it. Other times you can see it happening.
In November 1975, at a summit meeting in the picturesque Château de Rambouillet near Paris, leaders of the six richest industrial powers gathered to form a rather exclusive, though completely informal, little club.
A year later, upset at being left out of the club, Canada applied for and was granted membership after a month-long pledge drive in which Prime Minister Pierre Trudeau had to shotgun a six-pack of Molson, ride a moose bareback through the streets of Montreal, and ring the doorbell at the White House and run away.
Thus was borne the Group of Seven (G-7 — see how this works? Pretty clever, huh?).
The G-7 would meet informally (at enormous taxpayer expense) in a few dive bars like the Dorado Beach Resort in Puerto Rico, the Schaumburg Palace in Bonn, the Akasaka Palace in Tokyo, and the San Giorgio Maggiore in Venice; and at these gatherings the attendees would eat gourmet meals, quaff the finest wines, and discuss how to make the world a better, fairer place ….
Anyway, the little club remained closed to outsiders until, in 1997, UK PM Tony Blair and US President Bill Clinton invited Russian President Boris Yeltsin to pop along to Naples to observe the G-7 on the understanding that full membership in the club would be forthcoming.
To nobody’s surprise, in 1998 Russia participated in its first informal gathering, and, hey presto, the club was now….? Come on….? Yes, you’ve got it, the G-8!
Among its members, in 2012 the G-8 accounted for 50.1% of nominal global GDP:
Source: United Nations
The G-8 essentially encompasses the top third of the world….
Source: Wikipedia
Anyway, amidst the ongoing turmoil in and around Ukraine and in amongst the threats and counter-threats this past week, was a movement, led by Britain’s David Cameron, to punish Russia’s President, Vladimir Putin, by telling him he was no longer part of this very exclusive club:
(UK Daily Telegraph): The Group of Seven big economies (G7) should cancel a meeting with Russia in June, British Prime Minister David Cameron said on Monday as world leaders kicked off a two-day nuclear security summit in The Hague.
“We should be clear there’s not going to be a G8 summit this year in Russia,” Mr Cameron told reporters ahead of a hastily-convened meeting with other leaders of the G7 — a group of industrialised nations that excludes Russia, which joined in 1998 to form the G8.
The other six members of the G-7 rallied round Cameron and agreed that the upcoming summit in Sochi, scheduled for June, would be moved to the bright lights of Brussels and Russia would be excluded — though they were at pains to point out that the exclusion would be temporary.
Having been slapped across the back of the legs, it was time for Putin to make the promises necessary to reingratiate himself with the giants of the G-7, like François Hollande, who talked tough as Russian troops casually wandered into sensitive military installations in Crimea, meeting precisely zero resistance:
(Reuters): “We have to also think about other sanctions if there is an escalation,” French President Francois Hollande said before the summit. “If there are illegitimate claims, if there are troop operations, if there are threats, then there will be other sanctions.”
However, just when the G-7 had Vlad the Invader right where they wanted him, he outmaneuvered them in a manner that could potentially shift those sands I was talking about in previously unfathomable ways….
The article Things That Make You Go Hmmm: Fight Club was originally published at mauldineconomics.com.
How The Situation In Eastern Europe Has Affected The EURUSD
By MXT Global
In February 2014, the president of Ukraine, Viktor Yanukovich, was impeached by the country’s interim government after countless protests caused a revolution. The former president had made several well-known deals with the Russian Federation, and the people of Ukraine clearly indicated that they have a strong desire to ally the country with Europe and to join the European Union.
The volatility has proved both profitable and nightmarish for traders willing to take the risks, with MXT Global’s Forex analysts providing their technical analysis.
Sources: Bloomberg, Emirates NBD Research
Three days after the temporary government had been established, Russian soldiers invaded the Republic of Crimea, which is a small peninsula that is located in the southern part of Ukraine.
The Revolution
The initial protests began in early February. In the first 15 days of February, the value of the euro increased substantially.
The main protests against the government of Ukraine took place in Kiev and other major cities between February 18, 2014 and February 23, 2014. During this time period, the EUR/USD remained stable, and only small fluctuations in the currency pair’s value occurred.
The Invasion
The international worth of the EUR/USD fell swiftly on February 26, 2014 as news first reached investors that Russia had sent troops into the Republic of Crimea.
However, banks began to purchase euros again on February 28, and investors started to rapidly liquidate dollars. On this day, the exchange rate of euros to dollars increased by almost one percent.
In early March, the European Union and the United States officially issued statements that condemned Russia’s actions; however, Vladimir Putin announced that Russia would not recognize Ukraine’s new government.
After these announcements, the value of the EUR/USD increased rapidly again.
The Input Of The People
A referendum was scheduled for the middle of March, and during the 10 days that preceded the vote, the international value of the euro continued to rise steadily. When the result was announced, the government of Russia proudly proclaimed that the 2.5 million people who live in the area had opted to make the Republic of Crimea a new province of Russia.
As a result, the value of the euro fell swiftly during the next several days.
In spite of a substantial gain on March 24, 2014, the exchange rate of euros to dollars has been dropping steadily since the announcement because of the European Union’s inability to stop the Russian annexation of the peninsula.
The estimated worth of the euro increased slightly after 100 members of the United Nations created a non-binding resolution that indicated that the results of the referendum were invalid.
About the Author:
This article was provided by the analysts at MXT Global. MXT specialises in Forex and Binary Options trading with MetaTrader.
NZD/USD corrects lower after touching 0.8700
Since going up to the resistance from March 2013, NZD/USD failed to put in a daily close above it for four consecutive business days. The pair has been dropping since yesterday’s last bullish push, an attempt that went as high as 0.8700. ANZ Commodity Price Index dropped 0.1% from February, down to 337, marking the first decline in four months.
Technical Analysis
Yesterday’s drop formed a bearish engulfing pattern on the daily timeframe, conveying the market’s intentions for a correction from this point onward.
The first supports have already been broken, with price already closing below the trendline that defined this bullish rally since early February. Next in line is the 0.8565-0.8570 area, where the 100 Simple Moving Average on 4H timeframe, 61.8% Fibonacci retracement from 0.8500 to 0.8700 and a small pivot point from late February might provide temporary support.
A close below 0.8565 will extend the correction towards 0.8500 price pivot zone. Later it can drop to 0.8466, where the 200 Simple Moving Average on 4H and 38.2% Fibonacci retracement between 0.8050-0.8700 should provide sellers with a more meaningful challenge.
Until the bullish trend configuration of higher swing highs and higher swing lows isn’t completely invalidated, all rejections starting from the afore mentioned levels should be treated with caution, since they can mark the end of the correction and continuation of the main trend.
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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets
Wave Analysis 02.04.2014 (DJIA Index, Crude Oil)
Article By RoboForex.com
Analysis for April 2nd, 2014
DJIA Index
Index is moving towards new maximums. Probably, after completing double three pattern inside wave [2], price started forming bullish impulse inside wave (1). Instrument may yet continue growing up for a while, but later market is expected to start new correction.
More detailed wave structure is shown on H1 chart. It looks like price is finishing the fifth wave inside wave (1). In the future, after wave (2), I’m planning to increase my long position with target in the end of the third wave.
Crude Oil
Oil started forming wave 3. Earlier price completed the second wave, during which I opened my first sell order. During local correction, I opened the second order and later plan to add several more.
As we can see at the H1 chart, wave 2 took the form of zigzag pattern with triangle pattern inside wave [B]. On minor wave level, price is completing the fourth wave inside wave [1]. Probably, during the day instrument may break local minimum.
RoboForex Analytical Department
Article By RoboForex.com
Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
