Connect with us

Forex

Yellen Hot Economy Seen as Growth Cure With World Bank Blessing

Published

on

world-bank-chief-economist-paul-romer
  • Yellen Hot Economy Seen as Growth Cure With World Bank Blessing

World Bank Chief Economist Paul Romer buttress Yellen Janet hot economy model. Explaining that running economy above Federal Reserves’ current inflation and unemployment target will improve it more rapidly without offsetting policies. This, unconventional concept, maybe the new way of thinking and even aid Fed’s decision in holding off rate hike till first quarter of 2017, when they are more certain the economy can sustain current progress in the labour market and the services sector. Read his interview below.

World Bank Chief Economist Paul Romer urged global policy makers to run their economies hotter, driving down spare capacity and unemployment to expose longer-run obstacles to growth.

“If we could be running it much closer to full capacity, all of the shortages, bottlenecks and constraints” would surface, Romer said in an interview Thursday in Washington. That would allow policy makers to zero in on the next steps for raising the economy’s potential to grow, he said. “If you artificially stress the system, you actually improve it more rapidly.”

Romer’s comments, which he said are derived from manufacturing improvement theories of management guru William Edwards Deming, are resonant of another top policy maker — Federal Reserve Chair Janet Yellen. Last month, she said there were “plausible ways” that “temporarily running a high-pressure economy” could benefit growth in the long run.

Allowing unemployment and inflation to exceed a central bank’s targets without offsetting policies is known as running an economy “hot” among economists. When Yellen’s ideas were mentioned in the interview, Romer said, “exactly.”

It’s an unconventional idea, but that’s not unusual for Romer, 60. Before he was appointed the bank’s chief economist in July he was an economics professor at the business school at New York University. He’s one of the world’s leading experts on why economies grow and a maverick who has criticized his own profession for relying too heavily on models and theories. His work also wanders beyond mainstream economics to theories about the benefits of the rural-to-urban shift and cities as incubators of innovation.

Low Rates

The mix of sluggish output, slow inflation and low interest rates has put central banks around the world in a precarious position. With policy rates still around zero, there is little room to cut in the next recession. Fed officials left the benchmark lending rate unchanged in a range of 0.25 percent to 0.5 percent Wednesday, where it has been since December. Data released Friday showing payrolls increased by 161,000 and the unemployment rate fell to 4.9 percent in October, reinforcing the case for the Fed to hike rates next month.

“Everybody has been surprised at this persistent phenomenon of incredibly low interest rates and low growth, and low productivity growth,” Romer said. “Prolonged slack in the economy is really hurting things not only in the sense that we got wasted resources but we are not improving productivity.”

Other advanced economies are stuck in a similar rut, and their policy responses have also left their central banks vulnerable. The Bank of England’s bank rate is 0.25 percent; the European Central Bank’s benchmark rate is zero and its deposit rate is minus 0.4 percent; the Bank of Japan’s policy rate is minus 0.1 percent and it is purchasing 10-year government bonds to keep their yields around zero.

Sluggish Productivity

Gains in total factor productivity — a measure of how the mix of organizational structure, labor and capital are working together — enrich nations and allow companies to boost pay without raising prices.

In the U.S., it’s growing slowly or not at all: The average pace was just 0.29 percent in the past 12 quarters, according to the San Francisco Fed. By comparison, TFP rose 2 percent over the 12 quarters starting in 1996, following the introduction of Windows 95, which revolutionized home computing.

There is little monetary policy can do to directly impact productivity, except perhaps keep inflation low and stable. Yellen said last month at a Boston Fed conference that running the economy hot could, however, help set conditions that would boost investment, improve labor mobility, and perhaps spark research and development spending and more start-up activity.

Economists are puzzled about the causes of the productivity slowdown, which could be numerous. It “represents a decline in the secular rate of technical progress for reasons we don’t understand, and we don’t understand how persistent it is going to be,” said former Fed Governor Laurence Meyer in an interview.

Romer said governments need to be “more open minded about what we can do.” One recommendation: Open up more urban land for development. “You will get more construction, more infrastructure,” he said.

As far as business investment goes, the chief economist said it is easy to see the biggest obstacle to private sector confidence right now, only days before Americans pick a new president: political uncertainty.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Continue Reading
Comments

Forex

CBN Goes After Abokifx, Freezes Bank Accounts for Publishing Black Market Rates

Published

on

Abokifx - Investors King

The Central Bank of Nigeria (CBN) has directed deposit money banks to freeze all the bank accounts associated with AbokiFX and its owner, Oniwinde Olusegun Adedotun, for publishing foreign exchange rates other than the rates determined by the CBN.

The apex bank had warned publishers to desist from publishing forex rates determined by the unregulated parallel market, popularly known as the black market, where speculators and hoarders largely manipulate the nation’s foreign exchange rates as seen in recent weeks.

In an email to publishers by the NGN Project, presumably acting on behalf of the CBN, the organisation had quoted section 11 sub-section 1(c) and 2 (a,b) of the National Economic Intelligence Committee Act of 2004 that stated “it shall be an offence for any person, association of individuals or body corporate (whether public or private) to publish or cause to be published exchange and interest rates other than the rates determined by the Bank from time to time.”

The Act stipulated N100,000 fine or imprisonment for a term of two years or both for individual and N500,000 fine and suspension or revocation of certificate of registration or cerificate of incorporation for association or individuals or corporate body.

This was after the central bank halted the sale of forex to bureau de change operators after accussing them of aiding the activities of criminals at the unregulated black market and been a channel for illicit financial flow. The move, which resulted in chronic forex scarcity and all time high foreign exchange rate, has forced the apex bank to go after publishers in effort to discourage people from patronising the black market and to force Nigerians to reject the unreason exchange rate of N567 to a United States Dollar and approach their banks for N412 to N415 per US Dollars.

Despite covid-19 challenges and limited forex generation, the apex bank has continued to support the Nigerian Naira and go after forex manipulators.

The NGN Project had described AbokiFX.com and its owner has criminals ‘committing crimes against the Nigerian state’. See the email CBN sent to publishers below.

 

Continue Reading

Naira

Naira Exchange Rates Today, Thursday, September 16, 2021

Published

on

Naira - Investors King

Naira continued its downward trend against other currencies on Thursday as it plunged to N565 against the United States Dollar at the black market. The local currency traded at N765 and N650 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 N555, N765 and N645 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

Date USD GBP EURO YUAN Canadian Australian
NGN BUY/SELL BUY/SELL BUY/SELL BUY/SELL BUY/SELL BUY/SELL
16/09/2021 557/565** 758/765** 640/650** 70/75 430/440 310/330
15/09/2021 552/562 754/760 640/648 70/75 430/440 310/330
14/09/2021 550/557 754/760 640/645 70/75 430/440 310/330
13/09/2021 543/550 742/750 630/636 70/75 425/435 310/330
10/09/2021 538/545 738/745 630/636 70/75 420/432 310/330
09/09/2021 532/540 730/740 627/632 70/76 419/430 310/330
08/09/2021 528/535 723/730 623/629 70/75 419/426 310/330

Bureau De Change Naira Rates

Date USD GBP EURO
NGN BUY/SELL BUY/SELL BUY/SELL
16/09/2021 548/555 753/765 635/645
15/09/2021 548/555 750/761 635/645
14/09/2021 548/555 750/761 635/645
13/09/2021 535/550 737/745 630/636
11/09/2021 530/547 735/745 630/635
10/09/2021 530/547 735/745 630/635
09/09/2021 528/538 730/738 625/630
08/09/2021 525/531 718/730 616/625

Central Bank of Nigeria’s Official Naira Rates

N.B: These tables are updated three times a day.

 

Continue Reading

Naira

Dollar to Naira Exchange Rate Today, Tuesday, September 14, 2021

Published

on

Naira Notes - Investors King

Naira extended its decline on Tuesday as it hits N557 against the United States Dollar at the parallel market, popularly called the black market.

The local currency exchanged at N557 to a United States Dollar at the black market, representing an all-time record low against the greenback. Against the British Pound and the Euro common currency, the Naira slid to N760 and N645, respectively.

Africa’s largest economy is enmeshed in low forex liquidity caused by poor economic structure that over the years has limited and weakened the nation’s foreign revenue generation. This weak foreign revenue generation has impeded Nigeria, a largely import dependent economy, from effectively servicing her economy with necessary forex for economic activities.

The inability to service the economy with enough forex coupled with the decision of the Central Bank of Nigeria to halt the sale of forex to Buruea De Change Operators have compounded Nigeria’s forex situation and further disrupted the Naira’s outlook.

Still, the apex bank continues to post its inaccessible official rates as shown in the table below. Despite insisting that exchange rates are stipulated Central Bank of Nigeria’s rates, many Nigerians and businesses operating in the country find it hard or impossible to access forex at the central bank’s rates.

The Central Bank of Nigeria sells U.S Dollar at N410.51, while the British Pound and Euro are sold at N568.1869 and N483.6629, respectively.

Naira Black Market Exchange Rates

Morning * Midday** Evening *** Final Rates

Date USD GBP EURO YUAN Canadian Australian
NGN BUY/SELL BUY/SELL BUY/SELL BUY/SELL BUY/SELL BUY/SELL
14/09/2021 550/557 754/760 640/645 70/75 430/440 310/330
13/09/2021 543/550 742/750 630/636 70/75 425/435 310/330
10/09/2021 538/545 738/745 630/636 70/75 420/432 310/330
09/09/2021 532/540 730/740 627/632 70/76 419/430 310/330
08/09/2021 528/535 723/730 623/629 70/75 419/426 310/330

Bureau De Change Naira Rates

Date USD GBP EURO
NGN BUY/SELL BUY/SELL BUY/SELL
14/09/2021 548/555 750/761 635/645
13/09/2021 535/550 737/745 630/636
11/09/2021 530/547 735/745 630/635
10/09/2021 530/547 735/745 630/635
09/09/2021 528/538 730/738 625/630
08/09/2021 525/531 718/730 616/625

Central Bank of Nigeria’s Official Naira Rates

N.B: These tables are updated three times a day.

Continue Reading




Advertisement
Advertisement
Advertisement

Trending