New Zealand’s dollar surged to the highest since May 2015 after traders deemed the central bank’s decision to cut borrowing costs was insufficiently dovish amid the global ardor for yield spurred by unprecedented global monetary easing.
The kiwi climbed against all of its 16 major counterparts after the Reserve Bank of New Zealand cut its official rate to a record, aping the reaction of its Australian counterpart when officials there lowered borrowing costs earlier this month.
Some investors had been looking for a more aggressive easing signal from the central bank, which indicated it would cut rates at least once more to boost weak inflation. The U.S. dollar advanced against the euro after last week’s better-than-expected jobs data bolstered a view that the Federal Reserve is among few central banks in developed economies whose next policy move will be to tighten.
“The kiwi surged because some in the market were looking for a very aggressive easing from the RBNZ,” said Ned Rumpeltin, the European head of foreign exchange strategy at Toronto Dominion in London. “So, even as they cut rates by 25 basis points and delivered one of the clearest easing biases currently seen among major central banks, some walked away from today’s meeting disappointed.”
The RBNZ lowered its official cash rate by a quarter point to 2 percent and published bank-bill forecasts indicating just one more reduction was in the pipeline. All sixteen economists surveyed by Bloomberg had expected the RBNZ to reduce by a quarter point. The futures market indicated on Wednesday that traders were certain of a reduction and even saw 20 percent odds for a 50 basis-point drop.
The RBNZ and the Reserve Bank of Australia prefer weaker currencies to stoke inflation back into their respective target bands. Two rate reductions by the Australian central bank since May and six by its antipodean neighbor in the past 14 months haven’t weakened exchange rates as their benchmark borrowing costs remain well above those of their peers, attracting foreign investment.
The kiwi climbed 0.6 percent to 72.49 U.S. cents as of 7:44 a.m. in New York, having jumped as much as 1.9 percent to 73.41 — the highest since May 2015 — after the RBNZ announcement. The Australian dollar rose 0.1 percent to 77.14 cents and is at levels not seen since before the May rate reduction.
“Australia and New Zealand yields remain attractive in a low-rate world,” said Jason Wong, a currency strategist at Bank of New Zealand in Wellington. “There’d still be upward pressure on the currencies even with rate cuts and that has been an ongoing theme since the start of the current-easing cycle. The U.S. outlook and in particular the prospect of Fed policy-tightening remains the key for the two currencies.”
After saying in his policy statement that a decline in the kiwi dollar “is needed,” Wheeler conceded in a news conference in Wellington that the RBNZ had “very limited influence” over the exchange rate. He also said he hadn’t given serious consideration to a half-point reduction because it wasn’t warranted and, in a “normal” situation, the RBNZ would probably be raising rates to cool the rampant housing market.
Australian 10-year bonds offer a 34 basis points yield spread over their U.S. equivalent, up from a low of 26 basis points Aug. 2. New Zealand 10-year bonds yielded 60 basis points more than similar American notes.
“Markets remain in strong yield-seeking mode,” said Robert Rennie, Westpac Banking Corp.’s global head of foreign-exchange and commodity strategy. “Both the Australian dollar and the New Zealand dollar appear well-supported for now.”
Naira Gained Slightly at I&E Forex Window to N412.81/$US
Despite the Nigerian Naira trading at a record-low across the nation’s unregulated black market, the embattled currency opened slightly higher at N412.81 to a United States Dollar on Monday at the Investors and Exporters Forex Window, representing an increase of 0.08 percent when compared to the N412.88 it closed on Friday.
The improvement in Naira value was after the Central Bank of Nigeria (CBN) directed all depoisit money banks operating in the country to freeze bank accounts linked to Oniwinde Olusegun Adedotun, the founder of www.abokfx.com, a forex rate publishing platform.
Godwin Emefiele, the Governor, CBN had blamed black market and bureau de change operators for the constant plunge in Naira value against its global counterparts and insisted that forex rates remained the apex bank stipulated rates and not the unregulated rates imposed by speculators and hoarders and published to the public by Abokifx and other business platforms.
“There was a particular time I asked our colleagues to call the so-called owner of abokiFX, that we want to understand his model and how he came about advertising those rate, we find him as someone, a Nigerian who lives in England and conducts this nefarious activity on our economy.
“It is economic sabotage and we will pursue him, wherever he is, we will report him to international security agencies, we will track him, Mr Oniwinde, we will find you, because we cannot allow you to continue to conduct an illegal activity that kills our economy.” Emefiele said.
The governor further stated that the website was set up primarily manipulate and speculate forex rates. He said “they get naira loans, use to purchase dollars, take a position, change the rate over a given period, sell the dollars they purchased and make a profit, this is completely illegal, unacceptable and we will pursue them.”
On Friday, the last time Abokifx published unregulated forex rates, Naira was qouted at N570 to a United States Dollar while the British Pound and the Euro were quoted at N770 and N655, respectively.
U.S Dollar Jumps to Three Weeks High on Better Than Expected Retail Sales
The United States Dollar rose to a three-week high after data from the Commerce Department showed that the U.S retail sales rebounded in the month of August despite falling consumer confidence.
The US Dollar Index rose to 93.40 on Monday to extend Friday breakout above the 93.00 key resistance level.
U.S retail sales jumped to its highest in five months in the month of August to beat 0.8 percent decline predicted by experts. Retail sales grew by 0.7 percent in August to increase the odds of the US Federal Reserve announcing tapering during next week’s Federal Open Market Committee (FOMC) meeting.
“U.S. consumption is not slowing as quickly as it appeared a month ago despite the fading stimulus, and the Delta variant did not much affect the industries feeding into retail sales,” said Chris Low, chief economist at FHN Financial in New York. “The economy continued to hum in August.”
Against the Japanese Yen, the U.S dollar strengthened to 109.48 from 109.91 attained on Friday on broad-based selloff during London trading session, while heavy selloff plunged British pound against the U.S dollar 1.36610 before reboundling slightly to 1.36946.
The Euro dropped from 1.17883 recorded on Friday to 1.16995 on Monday during London trading session.
Naira Exchange Rates Today, Friday, September 17, 2021
Naira continued its downward trend against other currencies on Friday as it plunged to N570 against the United States Dollar at the black market. The local currency traded at N770 and N655 to British Pound and Euro, respectively.
Persistent forex scarcity amid a series of in effective policies have made access to forex impossible for most of businesses that operates in largely import dependent African biggest economy.
Nigeria’s forex reserves, the means in which the nation, service its dollar consuming 200 million population has been on a decline in recent weeks despite crude oil trading at over a year high of $73 a barrel. Some of the factors that have crippled the ability of central bank to cushion the economy with enough forex is low crude oil production, partly due to production cap, weak local manufacturing sector that has made the nation a huge import dependent economy, the ongoing crisis between herders and farmers, rising costs even with falling inflation, etc.
At the bureau de change section, Naira exchanged at N565, N775 and N655 to a United States Dollar, British Pound and Euro common currency.
The Central Bank of Nigeria (CBN) had stopped the sale of forex to the bureau de change operators to plug forex leakages and curb activities of criminal elements, the decision has worsen forex availability. See other forex rates below.
Naira Black Market Exchange Rates
Morning * Midday** Evening *** Final Rates
Bureau De Change Naira Rates
Central Bank of Nigeria’s Official Naira Rates
|9/16/2021||SOUTH AFRICAN RAND||28.3101||28.3446||28.3792|
N.B: These tables are updated three times a day.
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