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Emerging-Market Currencies Surge on China Stimulus Hopes

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Platinum Mine strike

Indonesia’s rupiah led emerging-market currencies higher before a report on the U.S. economy and as China signaled it will take more steps to support growth. Developing-nation stocks traded little changed.

The rupiah headed for the longest rally since October after the government announced its eighth policy package. The offshore yuan rose the most in a week. Malaysia’s Axiata Group Bhd. paced gains for emerging-nation telecom companies after buying a stake in a Nepalese phone carrier. True Corp., a Thai phone stock, rebounded from the steepest slump in 11 months. Taiwan’s 10-year government bond yield fell to a record-low.

China’s government said monetary policy must be more “flexible” and fiscal policy more “forceful” to stem slowing growth in an economy that many emerging countries count as their biggest trading partner. Developing-nation currencies climbed for a third day, extending last week’s gains as bets that the Federal Reserve will raise interest rates gradually bolstered demand for riskier assets. A report Tuesday is forecast to show the U.S. economy grew less than previously estimated in the third quarter.

“Chinese stimulus is positive for the economy and many investors are gauging the general impact of any new measures as well as the longer-term impact of the Fed rate increase,” Attila Vajda, managing director of Project Asia Research & Consulting Pte., a Singapore-based advisory firm, said from Ho Chi Minh City. “The holiday season is impacting liquidity.”

The MSCI Emerging Markets Index was little changed at 791.54 at 12:27 p.m. in Hong Kong, trading below its 50-day moving average for almost a month. The stock benchmark has fallen 17 percent this year, set for the worst annual performance since 2011. The average valuation of companies on the gauge is 11.1 times estimated 12-month earnings, a 29 percent discount to the MSCI World Index, which has slid 4.1 percent in 2015.

A gauge tracking 20 emerging-market currencies rose 0.1 percent. The rupiah strengthened 1.1 percent, its fourth day of gains. Under a policy package announced on Monday, private-sector companies will be allowed to build oil refineries as long as they sell the end product to state-owned PT Pertamina. The nation will also scrap import taxes on aviation spare parts to support that industry.

The offshore yuan added 0.23 percent, according to data compiled by Bloomberg. South Korea’s won rose 0.2 percent in a two-day increase. “China’s stimulus is highly likely to support the won, just as the yuan halted its drop,” said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. “The dollar’s strength is losing steam when Korean exporters keep selling the dollars.”

Bonds

The yield on Taiwan’s 2025 bonds dropped three basis points to 1.015 percent, after earlier declining to 1.011 percent, an intraday record low for benchmark 10-year notes, Taipei Exchange prices show. The five-year yield fell two basis points to an unprecedented 0.60 percent. Disappointing economic data fueled speculation the central bank will ease monetary policy again after delivering two interest-rate cuts this year. Bonds surged last week after the central bank lowered its benchmark rate for the second straight quarter.

Five out of 10 industry groups in MSCI’s emerging-markets measure rose, led by telecommunication and health-care shares, while technology companies declined. Axiata climbed 2.8 percent in Kuala Lumpur after agreeing to buy a 80 percent stake in Ncell for $1.4 billion. True Corp. advanced 2.3 percent, halting a four-day slump.

The Shanghai Composite Index fell from a three-week high, dragged down by losses for the best-performing industry groups this year, as investors weighed growth measures from the nation’s top economic conference. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong fell 0.4 percent. Equity gauges in Malaysia, Indonesia, Philippines gained at least 0.2 percent.

Bloomberg

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Naira

Daily Naira Exchange Rates; Thursday, May 6, 2021

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Naira Exchange Rates - Investors King

Naira depreciated further at the parallel market on Thursday as the local currency traded at N485 to a United States Dollar. The Nigerian Naira exchanged at N676 to a British Pound and N585 to a Euro as shown below.

Naira Black Market Exchange Rates

Morning * Midday** Evening *** Final Rates

Date USD GBP EURO YUAN Canadian Australian
NGN BUY/SELL BUY/SELL BUY/SELL BUY/SELL BUY/SELL BUY/SELL
06/05/2021 480/485 665/676 575/585 62/69 395/405 292/320

Bureau De Change Naira Rates

Date

USD

GBP

EURO

NGN

BUY/SELL

BUY/SELL

BUY/SELL

06/05/2021

475/482

663/676

575/587

06/05/2021

475/482

663/676

575/587

Central Bank of Nigeria’s Official Naira Rates

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Forex

CBN Extends N5/$ Incentive Period to Boost Dollar Inflow

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Godwin Emefiele - Investors King

The Central Bank of Nigeria (CBN) has extended the N5 per US Dollar incentive on forex remittance indefinitely to boost liquidity and further deepen economic recovery.

The initiative was scheduled to end on May 8. It was introduced to encourage recipients of dollars to use formal banking channels and help the central bank capture such inflows to boost the stability of the local currency, which has been under pressure after oil prices plunged last year.

“We hereby announce the continuation of the scheme until further notice,” the regulator said in a statement on its website on Thursday.

The naira has been devalued three times since last year after a sharp drop in oil earnings, which accounts for 90% of foreign-exchange inflows, and remittances from workers abroad led to a dollar crunch in the West African nation, which produces the most crude in Africa. The local unit traded for 410.31 on the investors and exporters window, also called Nafex, as of 8:51 a.m. in Lagos.

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US Dollar

Dollar Falls as Risk Appetite Improves, Sterling Dips on BoE

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US Dollar - Investorsking.com

The dollar dropped to its lowest point in three days on Thursday as global market risk appetite improved, while sterling zig-zagged after the Bank of England slowed the pace of its bond-buying, but left interest rates unchanged.

Fewer Americans filed new claims for unemployment benefits last week, data showed, as COVID-19 vaccination efforts and massive amounts of government stimulus led to a further reopening of the economy.

While the U.S. economy has been gaining steam, Federal Reserve speakers on Wednesday downplayed the risks of higher inflation.

Those statements reinforced “the lower-for-longer mentality with regards to interest rates,” making the greenback less appealing, said Neil Jones, head of FX sales at Mizuho.

The safehaven U.S. dollar was last down 0.31% at 91.977 against a basket of peer currencies.

“What we’ve seen early in New York is a little bit of back-and-forth gyrations, just because of the Bank of England meeting,” said Erik Bregar, director and head of FX strategy at the Exchange Bank of Canada.

The Bank of England said it would slow the pace of its bond-buying as it sharply increased its forecast for Britain’s economic growth this year after its coronavirus slump, but it stressed it was not tightening monetary policy.

“They kept their QE target in place but they said they are going to reduce the weekly pace of purchases, but that’s not a signal and so sterling has kind of gone up and down and done nothing at the end of the day,” Bregar said.

The pound was last down 0.08% against the weaker dollar at $1.3900 .

The euro was up 0.47% versus the dollar at $1.2061 , and up 0.65% against the pound, at 86.88 pence per euro.

Investors were also paying attention to elections in Scotland that could herald a political showdown over a new independence referendum.

The Australian dollar fell sharply overnight when China said it would stop its economic dialogue with Australia, but the currency had recovered to trade close to flat on the day as European markets opened.

The Aussie was up 0.1% versus the U.S. dollar at 0.77515 at 1028 GMT, having hit as low of 0.7701 overnight.

The New Zealand dollar also dropped and was down 0.1% on the day.

“The announcements of the formal suspension of the economic dialogue between China and Australia should not have a lasting impact on markets given the already strained relationship between the two ahead of the event,” wrote ING strategists in a note to clients.

The Canadian dollar hit a three-and-a-half year high, helped by oil price gains and the Bank of Canada’s recent shift to more hawkish guidance.

In cryptocurrencies, ether traded around $3,500 after reaching a record high of $3,559.97 on Tuesday, skyrocketing nearly 800% this month.

Bitcoin declined 0.2% to $57,392.75.

The meme-based virtual currency Dogecoin soared on Wednesday to an all-time high, extending its 2021 rally to become the fourth-biggest digital coin.

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