Finance ministers from the world’s biggest economies met in Japan to discuss global growth and reaffirmed their pledge not to deliberately weaken their currencies to stimulate growth.
While others agreed, the Japan’s Minister of Finance Taro Aso has reiterated his stance that recent gain in the yen has been one sided and speculative. His statement also hints at growing frustration inside Japan’s government about the effect on exports after the currency gained 10 percent this year.
The U.S Treasury Secretary Jacob J.Lew on Saturday object to the statement saying the yen’s movement hasn’t been overly volatile and that there is no reason to intervene to weaken the yen.
- “I can understand if the currency moves up or down over time, but if you look at it over the last few weeks, you’ve got moves of 5 yen in a few days, or 8 or 9 yen. You can’t clearly say that that’s orderly.”
- From the U.S. standpoint, the yen had weakened from around 70 against the dollar to around 120, so “it’s natural” for them to say that the current moves are orderly.
- “They have an election and we have an election and we both have TPP talks. There are various things on our plates and we of course have to say various things as that’s our jobs. I think we always have to be careful to communicate so that emotion doesn’t get in the way of our talks.”
- “I have been clear on our analysis of current exchange-rate movements — it’s a pretty high bar to have disorderly conditions.”
- “It’s important that the G-7 again reiterated the positions that we’ve taken in the past, which are very important, which is a commitment to refrain from exchange-rate targeting. And I think it’s important that at the G-20 we had an agreement to refrain not only from competitive devaluation but to communicate so that we do not surprise each other.”
The meeting, which brought together finance ministers and central bank governors from Canada, Britain, Canada, Italy, Germany, Japan, France and the U.S., and representatives from the World Bank, International Monetary Fund and European Union, highlighted the risks from refugee flows, political conflicts, terrorism and the possibility of a U.K. exit from the European Union.
Naira Gains N1 to N483 Against US Dollar as CBN Warned Speculators of Impending Doom
The Central Bank of Nigeria on Tuesday warned speculators and hoarders of the United States Dollar against creating artificial forex scarcity for personal gain.
Godwin Emefiele, the Governor of the Central Bank of Nigeria, said black market forex rates does not reflect the economic reality of the Nigerian Naira as that section of the forex is tainted with bribes and individuals looking to profit at the expense of the nation.
“We do not agree that the determining factor for our currency should be based on a market that is tainted, where people go to offer bribes,” he stated during a virtual monetary policy committee briefing in Abuja.
The Nigerian Naira gained N1 against the United States dollar to trade at N483 at the parallel market also known as the black market, up from N484 it traded on Monday.
Emefiele said “The black market is illegal where people do not provide documentation to support transactions. It is unfortunate and unfair for analysts to say Nigeria’s exchange rate is at 480 per dollar.”
The Association of Bureau De Change Operators of Nigeria (ABCON) agreed with the central bank, saying speculators and currency hoarders are responsible for the wide forex rates. The association warned that speculators are going to lose money given that the apex bank has foreign reserves of $36 billion to support the local currency and meet forex demands.
The apex bank left the interest rate unchanged at 11.5 percent to further stimulate growth in the real sector and speed up the recovery process with cheaper loans. Other ratios were left unchanged as well.
Speaking on the rising inflation rate, Godwin Emefiele attributed the 14.23 percent increase in consumer prices to the rising pump price, the recent #EndSARS protest and structural policies.
Therefore, it looks like the apex bank will damn rising inflation for the first time to focus on economic productivity, new job creation and general growth.
The Naira CBN official rate remains $379 to a United States Dollar while it exchanged at N385 on the Investors and Exporters Forex Window on Tuesday.
Bureaux De Change Association Warns Against Hoarding of US Dollar, Says Speculators will Lose
The Association of Bureaux De Change Operators of Nigeria (ABCON) on Sunday warned currency speculators and hoarders of impending losses if they do not desist from creating bogus foreign exchange rates for personal gain.
In a statement titled, “ABCON warns speculators will lose money as CBN has enough reserves to fund market, defend naira”, the association said speculators and hoarders are taking a huge risk as the Central Bank of Nigeria has enough liquidity to defend the Naira and maintain stability against global foreign counterparts.
This is coming few days after the local currency plunged to N484 to a United States dollar and N620 against the British Pound at the black market due to the rising demand and persistent scarcity that most hoarders interpreted as lack of financial muscle on the part of the central bank, especially if the nation’s falling foreign reserves is factored in.
However, ABCON said with about $36 billion foreign reserves, the Central Bank of Nigeria has the necessary means to punish speculators and hoarders they described as enemies of the nation.
President of ABCON, Alhaji Aminu Gwadabe, explained that the central bank is working to unify the nation’s foreign exchange rates and eliminate past challenges that have made market determined forex rates almost impossible.
He said “I think that the CBN by pushing the official foreign exchange rate from N306 to N379 to the dollar is in line with market demand.
“It has also helped to narrow the official-parallel market rates gap that formed the basis of ridiculous speculations among unpatriotic forex dealers and spectators.”
Gwadabe, however, advised the Federal Government to improve security surveillance at the nation’s land borders to checkmate illegal foreign currency cash deals.
He also asked the central bank to raise liquidity ratio of bureau de change operators to discourage dollar holdings.
Forex Scarcity Plunges Naira to N620 Against British Pound
Naira Exchanges at N620 to a British Pound at Black Market
Lingering foreign exchange scarcity has plunged the Nigerian Naira to a record-low of N620 against the British Pound at the black market.
The declined by a record N14 from the N607 it exchanged to a single British Pound on Thursday to N620 on Friday, signaling rising demand for forex amid persistent scarcity.
Experts have attributed the surge in demand to the usual push for the end of the year sales by importers and businesses looking to close the sales gap created by the COVID-19 lockdown.
The local currency plunged against global counterparts by the most in recent months on Friday. The Naira declined by N13 against the European common currency to exchange at N570.
Similarly, the Naira lost another N4 against the United States dollar to exchanged at N484, further down from N480 it was sold on Thursday.
Experts are predicting further decline for the Nigerian Naira, largely due to the weak macro fundamentals, overexposure to crude oil uncertainty and US Dollar.
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