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Helicopter Money Predictions Are Still Flying High in Japan

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Yen surges to 18 months high against the dollar

Speculation of helicopter money refuses to die in Japan, despite repeated denials by Bank of Japan Governor Haruhiko Kuroda.

From Japan-based economists to global investors including Templeton Emerging Markets Group Executive Chairman Mark Mobius, there’s a reluctance to rule out the controversial policy coming as soon as next month amid the monetary authority’s struggles to stoke growth and inflation. Kuroda has said at least four times since April that helicopter money is not under consideration, and is prohibited by current law. He repeated over the weekend that there remains “ample space for additional easing” under the existing policy framework.

“It’s unthinkable that nothing would happen in September,” said Daiju Aoki, an economist at UBS Group AG in Tokyo. “The most likely measure would be pseudo-helicopter money where the BOJ will commit to holding Japanese government bonds for a long time.”

UBS is in good company. Mobius also said last week that direct financing of government spending could be imminent, while Aberdeen Asset Management said Japan is the most likely location for such an initiative. Bank of America Merrill Lynch’s head of global rates and currencies research David Woo said on Bloomberg Television this month that helicopter money is probably the only option left on the table.

The introduction of a negative deposit rate this year sent benchmark government bond yields tumbling to a record low of minus 0.3 percent last month. They have since retraced more than two thirds of that — and the policy failed to weaken the yen for more than a day. The 10-year sovereign yield was at minus 0.075 percent on Wednesday in Tokyo.

Talk of the BOJ needing to change tack has grown since Kuroda announced a comprehensive review of current measures for the Sept. 20-21 policy meeting, with a gauge of inflation expectations less than a sixth of the way to the 2 percent target. While Kuroda’s most recent comments underline his stance that the review won’t mean any reduction in stimulus, doubts have grown about the policy’s sustainability.

Helicopter money, a kind of last resort in unconventional monetary policy, comes in several forms. The most simple is printing money and giving it to the public in the hope they’ll spend it: equivalent to dumping cash from choppers in the air. Others include putting money directly into the hands of companies or financing state spending by having the BOJ buy bonds straight from the government.

Speculation about the policy peaked in July after a visit to Tokyo by former Federal Reserve Chairman Ben S. Bernanke during which he met separately with Kuroda and Prime Minister Shinzo Abe. He floated the idea of selling perpetual bonds directly to the central bank during discussions in Washington with one of Abe’s key advisers in April.

While Kuroda reiterated last month at a Group-of-20 meeting in Chengdu, China that helicopter money is not an option, he has changed course without warning before. He announced a negative interest rate policy in January after ruling it out the previous month.

“Given Abe’s popularity, he’s in a pretty good position to change the law if he wanted to,” Michael Moen, a Sydney-based investment manager at Aberdeen Asset Management, said in a phone interview last week. “If you were going to pick a central bank around the world and a government that was going to use helicopter money, I think Japan is clearly at the top of that list.”

While Moen doesn’t expect to hear the whirl of chopper blades anytime soon, Templeton’s Mobius suggests it could come next month.

BOJ Ammunition

“They’re really beginning to think what ammunition they have,” he said during a visit to Tokyo last week. “The first reaction is to say, OK, let’s go for helicopter money, let’s get money directly into the hands of consumers.”

Quantitative easing is also showing signs of approaching its limit as banks run out of securities to sell.

“It’s an extremely dangerous game the market is playing, but speculation of helicopter money will never go away completely,” said Masamichi Adachi, a senior economist at JPMorgan Chase & Co. in Tokyo. “Japan needs to think now about how it would use the policy, before the time comes when it might have to deploy it.”

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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Naira

Dollar to Naira Black Market Today, February 23rd, 2024

As of February 23rd, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,610 NGN in the black market, also referred to as the parallel market or Aboki fx.

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Naira Dollar Exchange Rate - Investors King

As of February 23rd, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,610 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,650 and sell it at N1,640 on Thursday, February 22nd, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate improved when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.

Black Market Dollar to Naira Exchange Rate

  • Buying Rate: N1,610
  • Selling Rate: N1,600

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Naira

Naira Appreciates Slightly to N1,542.58/$ at NAFEM

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New Naira notes

The Naira appreciated marginally against the United States dollar, closing at N1,542.58/$ at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday.

This modest gain represents a 2.9 percent appreciation from the previous day’s rate of N1,598.54, highlighting a nuanced fluctuation in the currency’s value.

According to data sourced from the FMDQ Securities Exchange, a platform overseeing FX trading in Nigeria, the Naira’s journey throughout the trading day was marked by an intra-day high of N1,755 and a low of N1,050.

Moreover, the total foreign exchange turnover surged to $172.14 million, indicating a 47 percent increase from the previous day.

Despite the Naira’s marginal gain at NAFEM, concerns persist regarding the widening gap between the official and parallel market rates.

The Naira’s depreciation to N1,900 against the dollar in the parallel market before it moderated to N1,687 later in the day.

Analysts and Bureau De Change operators foresee further pressure on the Naira, with predictions of a potential all-time low of 2,000/dollar at the parallel market in the coming weeks.

The demand for the greenback continues to fuel volatility, prompting regulatory actions from entities like the Economic and Financial Crimes Commission (EFCC) and the Central Bank of Nigeria (CBN) to curb speculative activities.

As stakeholders monitor the currency’s trajectory, the CBN’s efforts to address forex liquidity challenges and stabilize the Naira remain under scrutiny amidst evolving market dynamics.

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Forex

Police and EFCC Personnel Raid Bureau De Change Outlets in Ibadan’s Sabo Area

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Bureau De Change Operator

In a concerted effort to curb illicit currency dealings and stabilize the nation’s currency, Nigerian security operatives, including police and Economic and Financial Crimes Commission (EFCC) personnel, launched a raid on Bureau De Change (BDC) outlets in Ibadan’s Sabo area.

Sabo, a prominent district in Ibadan, the capital of Oyo State, serves as a central hub for currency exchange activities in the region.

Videos circulated on social media platforms captured the dramatic scene as armed security personnel and their convoy descended on the bustling Sabo Road.

The raid comes amidst growing concerns over the depreciation of the Nigerian naira, which hit record lows against major foreign currencies, including the dollar.

Sources revealed that the naira’s value reached alarming levels, with exchanges as high as N1980 to $1 on the parallel market and N1780 on the official market.

President Bola Tinubu’s administration has intensified efforts to crack down on individuals involved in currency racketeering, aiming to restore stability to the nation’s economy.

The clampdown signals a firm stance against illegal currency trading and serves as a deterrent to those engaging in speculative activities.

While the raids may disrupt illicit operations, they also underscore the government’s commitment to restoring confidence in the financial sector and promoting transparency in currency exchange practices.

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