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Dollar Boosted by Hawkish Fed Comments as Oil Drops With Gold

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Dollar to Naira Exchange Rate - Investors King

The dollar strengthened versus all of its major peers as hawkish comments from a Federal Reserve official boosted the likelihood of a U.S. interest-rate increase this year. The yen’s retreat was spurred by prospects for further monetary easing in Japan, while oil dropped with gold.

Dollar index rose to a one-week high after Fed Vice Chairman Stanley Fischer said Sunday the U.S. economy is already close to meeting the central bank’s goals and that growth will pick up. The yen fell for a second day and Japanese stocks advanced after Bank of Japan Governor Haruhiko Kuroda flagged the possibility that the authority’s unprecedented monetary stimulus will be added to in September. Elsewhere in Asia, most shares declined as oil fell to about $48 a barrel. Silver led losses among precious metals.

Global markets have been buffeted by comments from Fed officials flagging the possibility of higher borrowing costs as early as next month, even though minutes of the central bank’s last meeting struck a more dovish tone. The focus will shift to Janet Yellen’s speech this week in Jackson Hole, Wyoming, where top global central bankers will gather for a meeting. Futures traders on Friday assigned a 22 percent probability to a September rate increase by the Fed, up from 16 percent a week earlier.

“Janet Yellen’s speech on Friday will have the biggest impact on short-term market moves, especially if she follows in Stanley Fischer’s relatively hawkish tone,” said Angus Nicholson, a market analyst at IG Ltd. “A week of talking up the U.S. dollar will be good for U.S. financial stocks that would benefit from a rate rise and some of that positivity could spread over into financials globally.”

Currencies

Dollar Spot Index rose 0.4 percent as of 11:16 a.m. Tokyo time, after losing ground in each of the last two weeks. South Korea’s won fell 0.8 percent versus the greenback and New Zealand’s dollar lost 0.7 percent, the biggest declines among 16 major currencies.

“We expect the dollar to consolidate this week with a modest upside bias,” said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia in Sydney. “There is room for U.S. interest-rate expectations to adjust a bit higher this week.”

The yen dropped 0.5 percent to 100.73 per dollar. Kuroda told the Sankei newspaper that the BOJ is conducting a comprehensive review of Japan’s economy and finances and said there is “sufficient chance” of more easing at next month’s policy meeting. Softer July inflation data this Friday may raise odds for more aggressive BOJ easing, Haddad said.

Forwards on India’s rupee were little changed after India named Urjit Patel to take over from Raghuram Rajan as central bank governor from Sept. 4.

Stocks

Japan’s Topix index added 0.5 percent as the yen’s decline boosted exporters including Toyota Motor Corp., which was headed for its highest close since March.

About three stocks fell for every two that rose on the MSCI Asia Pacific excluding Japan Index, with raw-materials producers leading losses among 10 industry groups. South Korea’s Kospi index slipped from a 13-month high as foreign investors pulled funds from the securities for the first time in a week, while Taiwan’s benchmark was set for its lowest close in a month. Hong Kong’s Hang Seng Index rose 0.1 percent, after retreating from a nine-month high on Friday.

Futures for the S&P 500 Index fell 0.1 percent after the gauge ended last week within 0.3 percent of an all-time high. Pfizer Inc. is close to an agreement to buy Medivation Inc. for about $14 billion and a deal may be announced as early as Monday, according to people familiar with the situation.

Commodities

Crude oil declined 1.1 percent to $48.01 a barrel in New York after Iraq, OPEC’s second-biggest producer, said it will boost exports by about 5 percent amid a glut of supply. The price jumped 9.1 percent last week on speculation that OPEC talks next month could lead to an output freeze. U.S. drillers added rigs for an eighth week, the longest run since April 2014, Baker Hughes Inc. data show.

Silver dropped as much as 3 percent to a seven-week low, while gold was down 0.6 percent amid the dollar’s advance. Silver has rallied 37 percent this year while gold jumped 26 percent as the Fed refrained from tightening and other central banks embraced negative rates, benefiting bullion which doesn’t pay interest.

Bonds

U.S. Treasuries due in a decade fell, pushing their yield up by one basis point to 1.59 percent. The yield could climb toward 1.70 percent if Yellen’s remarks are along the lines of those made by Fischer when she delivers her address on Friday, according to Su-Lin Ong, a senior economist at Royal Bank of Canada in Sydney.

“The market is clearly susceptible to Yellen making similar comments in Jackson Hole,” Ong said. “The most recent lot of Fed speakers — and these are key speakers — have signaled that the market should be putting a greater weight on the risk of a move before year-end.”

Australia’s 10-year bond yield increased by five basis points to 1.91 percent and Japan’s rose by one basis point to minus 0.08 percent.

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

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Naira

Naira Trades at N737/$ on Black Market Amid Scarcity, Campaign Activities

The Nigerian Naira depreciated to N737 against the United States Dollar at the parallel market, popularly known as the black market, on Thursday following the Independent Electoral Commission (INEC) decision to lift the ban on campaign activity.

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Naira Exchange Rates - Investors King

The Nigerian Naira depreciated to N737 against the United States Dollar at the parallel market, popularly known as the black market, on Thursday following the Independent Electoral Commission (INEC) decision to lift the ban on campaign activity.

Checks by Investors King showed that persistent dollar demand by politicians amid scarcity are two main factors impacting the exchange rate on the black market.

The President, Association of Bureaux de Change Operators of Nigeria, Alhaji Aminu Gwadabe, disclosed that elections, loss of confidence, and the force of demand and supply are what is driving the market at the moment. 

“It is a market where demand and supply determine the price. Do not forget that election years are associated with foreign exchange volatility”, he noted. 

A parallel market operator our correspondent spoke to in Abuja on Thursday evening quoted Naira at N737 to a dollar. This was different from what was quoted in the morning. The dollar was sold for N735 in the morning of the same day. 

Abba Muhammed said he would buy dollars at the rate of N733 and sell at N737. It could be recalled that the dollar was sold at N728 on Wednesday. 

Investors King understands that dollar was traded at N707 to a dollar at the beginning of September. This represents a difference of N30 (4.2 percent). 

On the other hand, the dollar to naira exchange was significantly stable at the Importer and Exporter (I&E) Window at N430 to one dollar. 

It is widely believed that political activities leading to the next year’s elections will further decrease the value of the naira against the dollar. Analysts opined that politicians will scramble to stack dollars ahead of the 2023 elections. 

The electoral commission has fixed the 26th of February and 11th of March for the 2023 general elections. 

Meanwhile, Nigeria’s forex reserves barely stood above $39 billion on Thursday which was a drop of about

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Pound

Why Pounds Sterling Plunged to a 37-Year Low

Global economic uncertainty amid the decision to cut tax by over 50% despite the rising inflation rate has plunged the Pounds Sterling to a 37-year low against the United States Dollar on Monday.

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pound-sterling

Global economic uncertainty amid the decision to cut tax by over 50% despite the rising inflation rate has plunged the Pounds Sterling to a 37-year low against the United States Dollar on Monday.

On Friday, the new U.K. Chancellor, Kwasi Kwarteng announced the biggest tax cuts in 50 years and on Monday said he will keep cutting taxes to put money in the pocket of the people, support businesses and grow the economy, Investors King understands.

This, he planned to achieve by reducing government revenue via tax and simultaneously increase the money circulation despite the country’s 9.9% inflation rate in August.

He argued that increased growth would eventually compensate for the drop in revenue in the long term. He further stated that the almost £45 billion expected to be cut off from the nation’s tax revenue through 2027 under his policy would “turn the vicious cycle of stagnation into a virtuous cycle of growth”.

“We need a new approach for a new era, focused on growth,” he stated.

Global currency traders immediately started relinquishing their holdings of the Pounds Sterling for the United States Dollar and other currencies to avoid impending doom expected to hit the British Pound in the days ahead.

It is impossible to grow the economy as predicted by Kwarteng when prices of crude oil and other commodities remained high due to Russia’s invasion of Ukraine.

Also, with the United States Dollar trading at 1.1031 to the Pounds Sterling after plunging to 1.03325 on Monday, the cost of importing goods from the United States and buying goods quoted in U.S. Dollars will impact whatever money the Chancellor plans to put in the pocket of British people.

Similarly, exports from the United Kingdom would be cheaper for holders of foreign currencies and affect the profit of export-dependent businesses.

Basically, global investors are worried external factors would disrupt U.K policy given the current global happenings. Experts have started predicting that inflation could jump above 10.1% recorded in July, except the Bank of England called an emergency meeting ahead of the scheduled November 3 policy meeting to raise interest rates to curb jump in inflation predicted to result from Kwarteng policy.

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eNaira

More Nigerians Embraces E-Naira Mobile Application, Nears 1 Million Downloads

E-Naira Mobile Application has so far recorded 905,588 downloads, with 282,600 active users. 

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enaira wallet

E-Naira Mobile Application has so far recorded 905,588 downloads, with 282,600 active users. 

The Governor of the Central Bank of Nigeria, Godwin Emefile declared yesterday at the CBN headquarters in Abuja. The CBN governor said more Nigerians are gradually embracing the eNaira wallet. 

It could be recalled that the Central Bank of Nigeria (CBN) launched eNaira in October 2021 as a digital form of Naira which can be used just like cash. The eNaira is equal in value to the paper naira.

E-Naira clearly differs from cryptocurrency because it is issued by a central authority, regulated and subject to banking laws. 

According to the CBN governor, about 1.5 million transactions worth over N3.484 billion has been carried out on eNaira wallets. 

A partial breakdown shows that customers-to-banks transactions have reached 78,115 transactions with a monetary worth of about N1 billion while banks to customers transactions stood at 90,760 with monetary worth of N945 million. 

Furthermore, customers-to-customers transactions stood at 35,800 with a capital value of N480 million while customer-to-merchant transactions have reached 171,000 transactions with a worth of more than N387 million.

Meanwhile, the CBN governor added that the introduction of the USSD short code to access eNaira has further driven its adoption. In August 2022, the central bank introduced a short code *997# as a supplementary service for the eNaira. 

Emefiele stated that 13,136 e-Naira wallets have been created through the unstructured supplementary service data (USSD). He declared that the apex bank is happy with the growth of eNaira while the bank expects the number to rise exponentially in the coming months. 

Nigeria is the first country in Africa to launch a digital currency. According to the Central Bank, a digital naira is aimed to drive inclusion, digital economy and the cashless policy of the central bank. 

Investors King learnt that other countries which have a digital currency include China, Bahamas and Jamaica. 

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