The dollar headed for its steepest three-week slide in more than four years as an increasingly cautious Federal Reserve spurred analysts and investors to reassess forecasts for the greenback.
A Bloomberg index tracking the U.S. currency against 10 major peers climbed from an eight-month low reached Friday, two days after Fed officials unexpectedly cut projections for interest-rate increases to two this year from the four they estimated in December. Macquarie Bank Ltd. and Morgan Stanley, two of the world’s top 10 currency forecasters, are highlighting the risk of more dollar weakness.
“The fact that they didn’t raise rates and wound back expectations for future increases in 2016 has obviously hurt the U.S. dollar,” said Derek Mumford, a director at Rochford Capital Pty in Sydney. “That can continue in the very near term.”
The Bloomberg Dollar Spot Index rose 0.2 percent to 1,185.52 as of 6:28 a.m. in New York, having fallen earlier to 1,180.83, the lowest since June 30. It has dropped 3.7 percent since Feb. 26, poised for the biggest three-week slump since October 2011. The greenback has depreciated at least 0.4 percent against all of its Group-of-10 peers since March 11.
The Fed meeting prompted investors to question whether the dollar’s rally has run out of steam. Bloomberg’s gauge had climbed 37 percent between its 2011 low and the closing peak reached on Jan. 22 of this year, as the promise of superior economic growth and rising interest rates contrasted with sluggish economic activities elsewhere.
“In terms of the relative difference in interest rates, the rally is over,” John Silvia, chief economist at Wells Fargo Securities LLC, said in an interview on Bloomberg Television’s “Countdown” with Manus Cranny and Anna Edwards. “The Fed has said we’re not going to be pushing this game like we were expected too.”
JPMorgan Chase & Co. lowered its year-end forecast for dollar-yen to 103 from 110 the same day. The median estimate is 120 among more than 60 analysts surveyed by Bloomberg.
The dollar was little changed at 111.38 yen Friday, on track for a 2.2 percent slide this week. It reached 110.67 on Thursday, the lowest since October 2014. The greenback gained 0.4 percent Friday to $1.1268 per euro, paring its weekly decline to 1 percent.
“The Fed has become much more dovish — the market realizing maybe the Fed being a little bit more behind the curve,” Dominic Schnider, the head of commodities and Asia-Pacific foreign exchange at UBS Group AG’s wealth-management unit in Hong Kong, said Friday in a Bloomberg Television interview. “That’s simply not good for the dollar, and so we have this generic dollar weakness right now which will not disappear in the very short term.”
While Morgan Stanley and Macquarie agree on the prospects for near-term weakness, they remain dollar bulls.
The greenback will decline over a one-to-three month horizon, after which it will begin climbing again on a resumption of Fed tightening amid looser policy elsewhere, Macquarie strategists Nizam Idris, Gareth Berry and Teresa Lam wrote in a report Thursday.
“The falling USD has the characteristics of a pain trade that seems to have further to run,” Morgan Stanley analysts including Hans Redeker, the global head of currency strategy, wrote in a note the same day . However, “for the USD to experience a long-term trend change requires more than a dovish Fed.”
Insider Dealing: Paul Miyonmide Gbededo Adds Another 612,326 Shares of Flour Mills to His Stake
Paul Miyonmide Gbededo, the Group Managing Director, Flour Mills of Nigeria Plc bought an additional 612,326 shares of the company.
The management stated this in a disclosure statement sent to the Nigerian Stock Exchange on Monday.
The managing director purchased the shares at N27.75 per share on November 20, 2020 at the Nigerian Stock Exchange in Lagos, Nigeria. Meaning, Gbededo has invested another N16,992,046.5 into the company.
This was in addition to the 3,284,867 shares valued at N91,642,269 and 4,200,852 shares worth N117.62 million purchased by Gbededo earlier in the month of November. Bringing his recent purchases to 8,098,045 million shares worth N226,254,315.5. See the details of the latest transaction below.
FCMB Reports 16.4 Percent Increase in Profit After Tax in Q3 2020
FCMB Group Plc, one of the leading financial institutions in Nigeria, reported a 16.4 percent increase in profit after tax for the third quarter of the year.
In the unaudited financial statements released through the Nigerian Stock Exchange (NSE), the lender’s profit before tax grew by 10.2 percent year-on-year to N4.8 billion while profit after tax increased by 16.4 percent to N4.2 billion.
FCBMB Group Plc expanded gross earnings by 4.8 percent to N48.3 billion during the period under review. Similarly, the bank’s net interest income rose by 30.03 percent year-on-year to N22.7 billion.
The strong performance continued across the board as net fee and commission income increased by 0.29 percent to N5.2 billion. Net trading income rose by 39.4 percent year-on-year to N1.82 billion.
Personnel expenses dropped by 7.9 percent to N6.9 billion during the quarter while general and administrative expenses declined by 7.52 percent year-on-year to N7.6 billion. Largely due to the COVID-19 lockdown.
Loans and advances to customers rose by 10.8 percent to N793.14 billion between December 2019 and September 2020. Total desposits from customers during the same period grew by 26.7 percent to N1.2 trillion.
The bank’s total assets increased by 22.12 percent to N2.04 trillion.
Stanbic IBTC Obtains Approvals, License to Establish Life Insurance Subsidiary
Stanbic IBTC Holdings Plc on Friday announced that it has obtained all required Regulatory Approvals and a license from the National Insurance Commission to establish a wholly-owned Life Insurance subsidiary, Stanbic IBTC Insurance Limited (SIIL).
In a statement signed by Chidi Okezi, Company Secretary, Stanbic IBTC and released on Friday, the bank said “The establishment of this new subsidiary essentially complements the bouquet of product offerings by Stanbic IBTC as it continues its goal of being the leading end-to-end financial solutions provider in Nigeria. In this regard, SIIL will aim to facilitate long term insurance for already financially included individuals and will seek to become the preferred Insurer in the Life Insurance Business.
“Stanbic IBTC Holdings PLC, a member of Standard Bank Group, is a full-service financial services group with a clear focus on three main business pillars – Corporate and Investment Banking, Personal and Business Banking and Wealth Management. The group’s largest shareholder is the Industrial and Commercial Bank of China (ICBC), the world’s largest bank, with a 20.1% shareholding. In addition, Standard Bank Group and ICBC share a strategic partnership that facilitates trade deals between Africa, China and select emerging markets. Standard Bank Group is the largest African financial institution by assets. It is rooted in Africa with strategic representation in 21 countries on the African continent.
“Standard Bank has been in operation for over 158 years and is focused on building first-class, on-the-ground financial services institutions in chosen countries in Africa; and connecting selected emerging markets to Africa by applying sector expertise, particularly in natural resources, power and infrastructure.”
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