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Dudley Says September Hike Possible, Markets Too Complacent

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William Dudley

The Federal Reserve could potentially raise interest rates as soon as next month, New York Fed President William Dudley said, warning investors that they are underestimating the likelihood of increases in borrowing costs.

“We’re edging closer towards the point in time where it will be appropriate, I think, to raise interest rates further,” Dudley, who serves as vice chairman of the rate-setting Federal Open Market Committee, said Tuesday on Fox Business Network. Asked whether the FOMC could vote to raise the benchmark rate at its next meeting Sept. 20-21, Dudley said, “I think it’s possible.”

Investors expect about one rate hike between now and the end of next year, according to federal funds futures contracts, and they marked up probabilities only slightly on Tuesday. Dudley said such estimates are “too low” and that “the market is complacent about the need for gradually snugging up short-term interest rates over the next year or so.”

“We are looking for growth in the second half of the year that will be stronger than the first half,” Dudley said. “I think the labor market is going to continue to tighten, and in that environment I think we are getting closer to the day where we are going to have to snug up interest rates a little bit.”

The FOMC left interest rates unchanged when it met last month, but said in a post-meeting statement that “near-term risks to the economic outlook have diminished.” The Fed will publish minutes of that meeting Wednesday at 2 p.m. in Washington.

Atlanta Fed President Dennis Lockhart, also speaking Tuesday, said he’s confident growth is accelerating, setting the stage for one or two rate increases this year. He said he wouldn’t rule out one coming in September.

‘Serious Discussion’

“If the meeting were today, I think the economic data stream would justify a serious discussion of a rate increase,” Lockhart, who isn’t a voting member of the FOMC this year, told reporters after a speech in Knoxville, Tennessee. “Now we have more data to come in in the next few weeks before the meeting. We’ll see what that tells us. But I would not rule out September, at least for a serious discussion.”

While U.S. stocks rose to another record high on Monday, the New York Fed chief said he didn’t see any signs of asset bubbles that are “particularly disturbing.” At the same time, the bond market “looks a little bit stretched,” in part because major central banks are “creating a search for yield globally” through their bond-buying programs, he said. That demand is spilling over to the U.S., where Treasury yields are higher than in Japan, Germany and the U.K.

“The 10-year Treasury yield, at 1.5 percent, is pretty low in an environment where we think we are making progress towards our objective, we’re pretty close to full employment, we think inflation is going to trend back to 2 percent over the next couple of years,” Dudley said.

Brexit Risks

Even so, Dudley struck a cautious tone on the pace and ultimate amount of Fed tightening. He said near-term risks from the effects on financial markets of the U.K. vote in June to leave the European Union had diminished, but added that there were uncertainties about the longer-term economic impact and whether foreign central banks would be able to support global economic growth with negative interest-rate policies.

In the U.S., “there are reasons to think that monetary policy isn’t particularly stimulative right now, and you can sort of judge that by the fact that we only grew at a 1 percent annual rate in the first half of the year,” he said. “So we probably don’t have a lot of monetary policy tightenings to actually do over time.”

A Labor Department report released Aug. 5 showed two straight months of strong job creation in June and July following a tiny increase in May that raised worries about the health of the economy. The Fed’s preferred measure of inflation, which has been below the central bank’s 2 percent target for four years, has been slow to pick up.

“In my mind, the inflation outlook really hasn’t changed very much,” Dudley said. “The key question is: Are we going to get enough growth to put pressure on resources, pushing up wages and gradually pushing up inflation towards 2 percent? So far we seem to be on that trajectory.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Forex

Zimbabwe Mandates Partial Tax Payments in New Bullion-Backed Currency

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In a strategic move to reinforce its new bullion-backed currency, Zimbabwe will require businesses to pay a portion of their taxes in Zimbabwe Gold (ZiG), Finance Minister Mthuli Ncube announced on Wednesday.

The regulations, aimed at enhancing the stability and acceptance of the ZiG, are part of broader efforts to strengthen the nation’s fiscal and monetary framework.

“The Treasury is stepping up to complement the fiscal and monetary policy framework aimed at further anchoring the currency, exchange rate, and price stability,” Ncube stated in an emailed announcement.

Since 2020, Zimbabwe has allowed taxes to be settled in the currency businesses predominantly use. However, under the new system, specific ratios will dictate the portions of taxes that must be paid in ZiG and other foreign currencies, alongside those that can solely be settled in the new unit.

The ZiG, introduced on April 5, 2024, replaced the Zimbabwean dollar, which had depreciated by 80% against the US dollar in the official market earlier this year.

Backed by 2.5 tons of gold and $100 million in foreign currency reserves held by the central bank, the ZiG is part of Zimbabwe’s broader strategy to avoid the pitfalls that led to the collapse of its previous six currencies.

“The changes will add to a raft of measures aimed at ensuring the ZiG doesn’t suffer the fate of its predecessors,” Ncube stated.

The finance minister highlighted that the new tax policy is designed to foster greater stability in the ZiG’s value and ensure it becomes a cornerstone of Zimbabwe’s economy. The government hopes that by requiring businesses to transact in ZiG, it will boost demand for the currency, thereby strengthening its position in the market.

Additional measures to bolster the ZiG include urging miners to increase gold production and extending the currency crackdown to include more stringent regulations on companies. These efforts are geared toward ensuring a steady influx of gold to back the currency, thus reinforcing its value and credibility.

Economists have noted that the success of the ZiG will depend heavily on these regulatory measures and the government’s ability to maintain a stable economic environment. The ZiG’s introduction has already shown a “positive impact” on the economy, but sustained confidence in the currency will be crucial.

“Zimbabwe’s new tax policy is a bold step towards economic stability,” said John Mangudya, Governor of the Reserve Bank of Zimbabwe. “By ensuring that a portion of taxes are paid in ZiG, we are creating a consistent demand for the currency, which will help maintain its value and prevent the hyperinflation that plagued our previous currencies.”

The move has received a mixed reaction from the business community. While some see it as a necessary step towards stabilizing the economy, others are concerned about the immediate impact on cash flow and the complexities of adapting to the new system.

“We understand the government’s need to stabilize the currency,” said Takura Mugaga, CEO of the Zimbabwe National Chamber of Commerce. “However, we urge the authorities to consider the implementation challenges businesses might face and provide adequate support during the transition period.”

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Naira

Black Market Dollar to Naira Exchange Rate Today 18th June 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of June 18th, 2024 stood at 1 USD to ₦1,480.

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New Naira notes

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of June 18th, 2024 stood at 1 USD to ₦1,480.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,510 and sold it at ₦1,500 on Monday, June 17th, 2024.

This indicates an improvement in the Naira exchange rate value when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,480
  • Selling Rate: ₦1,470

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

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Naira

Black Market Dollar to Naira Exchange Rate Today 17th June 2024

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on

New Naira notes

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of June 17th, 2024 stood at 1 USD to ₦1,510.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,490 and sold it at ₦1,480 on Thursday, June 13th, 2024.

This indicates a decline in the Naira exchange rate value when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,510
  • Selling Rate: ₦1,500

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

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