- Deutsche Bank Sees Yuan Falling 17% as Capital Outflows Quicken
The yuan will weaken 17 percent over the next two years as government efforts to cool the housing market, easier monetary policy and higher U.S. borrowing costs spur capital outflows, according to Deutsche Bank AG.
China’s currency will end 2017 and 2018 at 7.4 and 8.1, respectively, compared with Thursday’s rate of around 6.72 percent, economists Zhiwei Zhang and Li Zeng wrote in a report dated Thursday. The nation’s economic growth will probably slow to 6.2 percent next quarter, while outflows will intensify in the next few months, they wrote.
The yuan has fallen 0.8 percent this week as rising expectations of a U.S. rate hike by year-end boost the dollar and slumping exports dent the outlook for China’s economy. At least 21 mainland cities have introduced purchase restrictions and toughened mortgage lending since late September to restrain surging home prices. The monetary authority has refrained from lowering benchmark rates since October 2015.
“We believe a tightening Fed, a deflation of property bubble in China, and potential policy easing by the PBOC in 2017 will lead to persistent capital outflows,” Zhang and Zeng wrote.
While the nation’s foreign-exchange reserves appear to have stabilized, Goldman Sachs Group Inc. has warned outflows may be larger than they look because an increasing amount of capital is exiting the country in yuan rather than in dollars.
Deutsche Bank’s bearish outlook on the yuan contrasts with that of the currency’s top forecaster, Landesbank Baden-Wuerttemberg, which is more relaxed about the risks for further depreciation. Julian Trahorsch, an economist at the German bank, the most accurate forecaster of the yuan as ranked by Bloomberg, predicts the currency may start to rebound toward the end of next year as inflows rise and companies taper foreign debt repayments.
Deutsche Bank sees Shanghai’s reported move to tighten credit supply to property developers as a “significant step” by the government and more cities are expected to follow, according to the analysts, who cited a 21st Century Business Herald report.
“This is the first sign of credit tightening that targets developers, and it focuses on the land auction market, which we believe is a key to the rise of the property bubble,” the analysts wrote.
China’s financial regulators plan to tighten control on funds flowing into the property market in violation of current rules, according to people familiar with the matter. Authorities including the central bank aim to tighten control on speculative real-estate investments and money involved in land transactions, the people said.
Expansion in the world’s second-largest economy will slow in the first three months of next year, forcing the People’s Bank of China to cut interest rates in the second quarter, according to the Deutsche Bank report.
The yuan fell 0.1 percent in Shanghai on Thursday, while the offshore rate retreated 0.2 percent. The currency has dropped 3.5 percent against the dollar this year, the biggest decline in Asia, and weakened 6.2 percent against a trade-weighted index. The median forecast in a Bloomberg survey is for the yuan to finish this year at 6.75, and end 2018 at 6.79.
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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