Forex

Deutsche Bank Sees Yuan Falling 17% as Capital Outflows Quicken

Published

8 years ago

October 13, 2016

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.

Economic Outlook

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.

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Samed Olukoya

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, April 19th, 2024

As of April 19th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,100 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

10 hours ago

April 19, 2024

Samed Olukoya

As of April 19th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,100 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 N1,020 and sell it at N1,010 on Thursday, April 18th, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined slightly 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: N1,100
Selling Rate: N1,090

Naira

Naira’s Recent Gain Reflects Policy Direction, Says CBN Chief Olayemi Cardoso

Published

1 day ago

April 18, 2024

Samed Olukoya

Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), has explained that the recent surge in the Naira is a testament to the positive direction of government policies rather than active intervention to defend the currency’s value.

Addressing attendees at the spring meetings of the International Monetary Fund and World Bank in Washington, Governor Cardoso underscored that the CBN’s intention is not to artificially prop up the Naira.

He clarified that the fluctuations observed in the country’s foreign exchange reserves were not aimed at defending the currency but rather aligning with broader economic goals.

Over the past month, the Naira has experienced a notable uptick in value against the dollar, signaling a reversal from previous declines. Data from Bloomberg reveals a 6.4% decrease in liquid reserves since March 18, coinciding with the Naira’s rebound.

Despite this decline, Cardoso pointed out that around $600 million had flowed into the reserves in the past two days, reflecting confidence in the Nigerian market.

Governor Cardoso articulated the CBN’s vision of a market-driven exchange rate system, emphasizing the importance of allowing market forces to determine exchange rates through willing buyers and sellers.

He expressed optimism about a future where the central bank’s intervention in the foreign exchange market would be minimal, except in extraordinary circumstances.

The recent resilience of the Naira follows a period of volatility earlier in the year, marked by a substantial devaluation in January. Since then, the CBN has implemented measures to stabilize the currency, including monetary tightening and initiatives to enhance dollar liquidity.

Cardoso highlighted the transformation in market sentiment, noting that investors now perceive Nigeria’s central bank as committed to stabilizing inflation and fostering economic stability.

As Nigeria continues its journey toward economic recovery and stability, Cardoso’s remarks provide insight into the central bank’s strategy and its impact on the country’s currency dynamics.

Naira

Dollar to Naira Black Market Today, April 18th, 2024

As of April 18th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,020 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

1 day ago

April 18, 2024

Samed Olukoya

As of April 18th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,020 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 N1,050 and sell it at N1,040 on Wednesday, April 17th, 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.