By Camillus Eboh
ABUJA (Reuters) - Nigeria's finance minister said on Thursday she had ordered a slow down to fuel subsidy payments to allow verification that they are for genuine deliveries, an effort to combat fraud costing it billions of dollars.
"I decided that we should slow down the payments until we verify ... that what we are paying is really being paid for genuine product delivered, to avoid the mistakes we made in the past," Ngozi Okonjo-Iweala told a news conference.
Fuel shippers say they are facing delays at import terminals while their subsidy payments are scrutinised, and some private firms have halted deliveries, while others are relying on swaps for crude oil to receive payments.
Accountant-General Jonah Otunla, also at the conference, said the government had spent 1.44 trillion Nigerian naira in the first half of 2012, of which 1.036 trillion was on recurrent expenditure, the largest component of that being the fuel subsidy.
A parliamentary probe into the subsidy scheme released last month found it was riddled with fraud that had cost Nigeria $6.8 billion in just three years -- equal to a quarter of the national budget. It was one of the biggest corruption scandals in the history of Africa's top energy producer.
Okonjo-Iweala said she had come to the realisation that the subsidy must be slowed after paying out 451 billion naira -- more than half of the 888 billion naira the country budgeted for this year -- just on arrears for last year.
"It was at that point in time I decided," she said. "We will not be stampeded to make payment until we verify that what we are paying is correct ... We are taking it very cautiously."
She added that only 17 billion naira had been released against 2012 fuel deliveries as a result. Continued...
Forex Trades for the Greek Elections and Wednesday's Fed Meeting - Marketwatch
By Benzinga.com
Over the coming days, two major events will dominate global markets: on Sunday, Greeks will vote in a national election. Then, next week, the Federal Reserve will hold its June meeting. Traders looking to take a position on these events may turn to the forex market to do so.
EUR/USD Traders can take a position on the outcome of the Greek election via the EUR/USD pair. Those who believe that there will be a negative outcome in Greece (a Radical Left victory) would want to short the EUR/USD, especially after the currency pair has seen recent gains. As the chart below shows, the pair is running into significant neckline support (the straight red line across the top) and is supported by the upward-sloping tend line from the lows hit at the end of May.
This technical formation is interesting in that it usually results in a breakout of prices, often to the upside. However, as this pattern is aligning with the fundamental story of the Greek elections, a wise trader would expect that the results will determine the next move. A negative outcome may send the pair lower, near $1.25 and then to $1.2450, where there are significant technical supports. Upside resistance is in the $1.2780-1.2820 range, so there is significant room for a move on either side.
Gold Some market watchers have said that a negative outcome from the Greek elections will prompt the Fed to take action next week. Traders who follow this view would be wise to buy gold as a hedge against aggressive monetary policy, and a great way to take a position would be with the XAU/EUR cross. Buying gold against the euro will allow traders to hedge dollar exposure ahead of the Fed meeting and also allow traders to grasp onto potential losses in the euro.
Looking at the above chart, support is not too strong until 1259 and then again at 1245, so those are the levels to watch on the downside. On the upside, resistance is at 1300 and then again just below 1315. For those who believe in the optimistic scenario, shorting this pair will allow traders to benefit twice: first from the expected fall in gold (diminished hopes of liquidity) and second from euro appreciation. On the other hand, those that feel a bad outcome is destined should buy this pair, as the long gold exposure is beneficial in situations of added liquidity and being short the euro will allow investors to have a bearish stance on the common currency.
Long the Spread of French 10-Year Bonds Over German 10-Year Any contagion effects of a negative outcome in the Greek elections will be felt in peripheral bonds as traders see European leaders not living up to their words (remember, it was only last summer that Merkel continuously reiterated that no nation is to leave the euro). A loss of confidence in these leaders will result in a dumping of peripheral debt, but the contagion could also move to France, the weakest of the core nations. If French finances start being called into check, French bond yields will move higher and capital flight may weaken the banks. France's two biggest banks, Societe Generale and BNP Paribas, had more assets than the GDP of France at the end of 2011. Thus, if they were to get into trouble, France would have to bail them out--thus putting serious pressure on the nation's finances.
This pressure would result in even higher bond yields and capital flight out of the banks and into German banks or even German bunds. Thus, German bond yields would fall and French yields would rise, driving the spread between them higher. As difficult as it may be to buy bunds at ultra-low yields, it may be the safest play still. By buying bunds, traders are investing in a negative real return (and potentially even negative nominal return), however they are getting an implied call option on a new German deutschmark. Consider that if the euro dissolves, each nation would revert to its own domestic currency. German bunds would then be re-denominated and paid out in this new currency, which would likely appreciate significantly against the euro (some say between 25-50%). Thus, by buying bunds and shorting French bonds, traders get exposure to the potentially negative sentiment surrounding the elections, the flight to quality and out of risky assets, and a call option on a new, stronger German currency.
(c) 2012 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
India govt nominates finance minister for president - Channel NewsAsia
India govt nominates finance minister for president
Posted: 15 June 2012 2113 hrs
NEW DELHI - Indian Finance Minister Pranab Mukherjee, under fire for his recent handling of the rapidly slowing economy, is to step down after being named Friday as the ruling coalition's candidate for president.
The United Progressive Alliance (UPA) government, led by Mukherjee's Congress Party, announced that the 77-year-old minister would be its nominee for the largely ceremonial post of Indian head of state which falls vacant in July.
"There is broad support for his candidature," Congress supremo Sonia Gandhi said in a statement at a meeting of UPA leaders at the residence of Prime Minister Manmohan Singh.
The nomination means Mukherjee will have to resign as finance minister, with television reports suggesting he might step down on June 24.
There was no immediate announcement regarding his likely successor.
Although the president is India's titular head of state, the post is largely ceremonial, with real executive power residing with the prime minister and the cabinet.
Indian presidents are selected by an electoral college comprising MPs from both houses of parliament and state legislatures.
The election will be held July 19.
The choice of who will succeed the incumbent president, Pratibha Patil, has exposed fresh cracks in the increasingly fractured coalition, with its partners clashing over which candidate to put forward.
"The UPA appeals to all political parties and all members of parliament and members of state legislative assemblies to support the candidature of Pranab Mukherjee," Gandhi said in her statement.
Mukherjee's nomination comes at a time of growing criticism of his handling of the economy, which has slowed dramatically at a time of stubbornly high inflation and a depreciating rupee.
"I don't think that I am the depository of all knowledge and and expertise in our government. In our party there are a number of people who can handle the difficult economic situation," Mukherjee told reporters after his nomination.
"The prime minister himself (Manmohan Singh) is an eminent economist and under his stewardship we will overcome the temporary crisis."
In the January-March period, the economy grew just 5.3 percent, its slowest quarterly expansion in nine years.
Earlier this week, Standard & Poor's warned India could be the first of the BRIC emerging economies to lose its investment-grade rating unless the Asian giant revives its growth and spurs reforms.
In April, the firm changed India's credit outlook to negative from stable, maintaining India's rating at "BBB-" but warning it faced at least a one-in-three chance of losing its status if its public finances worsened.
"BBB-" is just one notch above "junk", which carries an increased risk of default and would see India having to pay higher interest rates on its public borrowing.
- AFP/ir
WORLD FOREX: Eerie Calm Before Greek Elections; Sterling Stumbles - NASDAQ
-- Norwegian krone, Swedish krona and Japanese yen make last-minute safe-haven surge before Greek election weekend
-- Euro holds steady in nervous trading ahead of Greek elections
-- Sterling briefly dives as BOE launches fresh crisis-fighting liquidity measures
By Alexandra Fletcher
Sterling stole the show in early European trade in an otherwise quiet session ahead of the Greek elections, diving against other major currencies as the Bank of England announced a new liquidity facility to help shield the U.K. from euro-crisis fallout, fanning suspicions the central bank is preparing for a rate cut.
The pound shed some 0.3% against the dollar, trading to a low $1.5477 and the euro surged to the day's high of GBP0.8152 as London traders digested the news that the Bank of England will launch its first auction as part of a series of emergency liquidity measures that will offer six-month loans to U.K. banks in exchange for a wide range of collateral.
The announcement of the initiative has prompted expectations that the Bank of England might extend its asset purchasing program, or quantitative easing, at next month's monetary policy meeting, with Barclays--a prominent U.K. bank--shifting its view so that it now expects a boost to so-called QE at the central bank's July meeting.
Further fuelling sterling sellers, the BOE also signaled deepening gloom over the U.K. economy, and concern over euro- crisis fallout. In addition to the liquidity boost, it also kickstarted a new program to encourage banks' lending to businesses.
"The alarm [over the deepening of the euro-zone crisis] in official circles was evident in the new initiatives on bank support... It remains to be seen how effective these two measures will be, and in the meantime we believe there is a strong argument for augmenting them with more QE," said Simon Hayes, an economist at Barclays in London.
However, alarm bells didn't ring for long and sterling rebounded to levels seen overnight during Asian hours.
Elsewhere, the euro was trading steadily, holding onto some small overnight gains against the dollar ahead of the Greek elections this Sunday, the result of which could determine whether Greece stays in the euro zone or not.
Some investors were seeking out safe havens for their cash in advance of the vote that is seen as a referendum on Greece's membership of the common currency. The hunt for safety sent the Norwegian krone to a three-month high against the euro and the Swedish krona to the day's high. The Japanese yen also benefited from safe-haven flows, charging to a one-week high against the dollar.
Looking ahead, after a bad run of U.S. data Thursday, the U.S. June Empire State manufacturing survey is due at 1230 GMT, along with U.S. May industrial production data at 1315 GMT.
At 1005 GMT, the euro was trading at $1.2619 against the dollar, compared with $1.2633 late Thursday in New York, according to trading system EBS. The dollar was at Y78.68 against the yen, compared with Y79.35, while the euro was at Y99.29, compared with Y100.26. Meanwhile, the pound was trading at $1.5548 against the dollar, compared with $1.5563 late Thursday in New York. The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 81.786 from about 81.810.
-By Alexandra Fletcher, Dow Jones Newswires; +44 (0) 20 7842 9462, alexandra.fletcher@dowjones.com; @djfxtrader
(END) Dow Jones Newswires 06-15-120734ET Copyright (c) 2012 Dow Jones & Company, Inc.
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