Forex

Yuan Slumps Most in a Month as Central Bank Cuts Reference Rate

Published

7 years ago

November 7, 2016

Yuan Slumps Most in a Month as Central Bank Cuts Reference Rate

The yuan dropped the most in a month after the central bank weakened the currency’s reference rate and the dollar rebounded.

The onshore exchange rate declined 0.3 percent to 6.7748 a dollar as of 12:02 p.m. local time, its biggest drop since Oct. 10. The currency rallied 0.4 percent last week, its best performance since July, as a tightening U.S. presidential election race dragged down the greenback. The yuan fell to a record low against a basket of currencies.

A gauge of the dollar’s strength gained for the first time in seven days on Monday, after the FBI said it stuck by an earlier finding that Hillary Clinton didn’t commit a crime in her handling of e-mails as secretary of state. The odds of an interest rate increase by the Fed in December rose to 76 percent, more than five percentage points higher than they were two weeks ago.

“The yuan will drop against the dollar and a basket of currencies in the coming days, as the PBOC has been engineering the depreciation to preempt any sharp spikes after the U.S. election or a Federal Reserve rate hike,” said Iris Pang, senior economist for Greater China at Natixis SA in Hong Kong. Policy makers “can control the pace of depreciation with stronger fixings and direct intervention if there are any signs of stress.”

China’s foreign-exchange reserves may have dropped by $34 billion to $3.13 trillion in October, according to the median forecast of economists in a Bloomberg survey. The figures are due to be released later Monday.

The Bloomberg replica of the CFETS RMB Index, which tracks the yuan against 13 exchange rates, dropped for a fifth day to 93.74 Monday. That’s the lowest since the gauge was introduced in December. The People’s Bank of China cut the yuan’s daily reference rate by 0.31 percent, the most since Oct. 21. The offshore rate slid 0.17 percent.

China’s monetary authority was speculated to be propping up the yuan during the run-up to a Group of 20 meeting in September and the yuan’s entry into the International Monetary Fund’s reserves on Oct. 1. The PBOC was then seen pulling support, leading to a 1.5 percent tumble last month as a gauge of dollar strength surged on mounting bets of Fed tightening.

Money Markets

The central bank drained a net 140 billion yuan ($20.7 billion) in open-market operations on Monday, the most in three weeks, data compiled by Bloomberg show. The monetary authority has stepped in to pull funds from the financial system since offering 437 billion yuan of loans to lenders via Medium-term Lending Facility on Nov 3.

The overnight repurchase rate, a gauge of interbank funding availability, fell for a sixth day, the longest losing streak since January. The rate fell one basis point to 2.09 percent Monday, weighted average prices show. The yield on government notes due in a decade rose one basis point to 2.75 percent, according to National Interbank Funding Center prices.

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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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Forex

Investors in Turmoil as Zimbabwe’s New Currency Wipes Out 330% Stock Market Gain

Published

6 hours ago

April 23, 2024

Samed Olukoya

Zimbabwe’s financial landscape has been rattled by the introduction of the new currency ZiG, spelling trouble for investors who had sought refuge in the stock market amidst economic turmoil.

The Zimbabwe Stock Exchange (ZSE) All Share Index has plummeted by 99.95% since the rollout of ZiG on April 5. This has erased more than 330% gain recorded earlier this year.

The introduction of ZiG, short for Zimbabwe Gold, was intended to provide stability to the country’s currency and succeed the embattled Zimbabwean dollar, which had already lost 80% of its value in 2024 alone.

However, instead of instilling confidence, the new currency has sent shockwaves through the stock market, leaving investors grappling with the fallout.

Prior to the currency conversion, investors had flocked to the stock market as a safe haven amid the Zimbabwean dollar’s depreciation and soaring inflation rates, which had reached a seven-month high of 55.3% in March.

However, the abrupt introduction of ZiG has reversed their fortunes, plunging share prices and trading volumes as the market grapples with the transition.

Justin Bgoni, the CEO of the Zimbabwe Stock Exchange, attributed the market’s poor performance to a combination of factors, including delays in currency conversion by financial institutions and tight liquidity conditions.

He noted that investors were also hesitant and uncertain about the value of assets denominated in ZiG terms, further exacerbating the situation.

The conversion of share prices from the old currency to ZiG at a swap rate of 1 ZiG to 2,498 Zimbabwean dollars has led to a significant decline in trading volumes and revenues for brokerage firms.

Lloyd Mlotshwa, head of research at Harare-based brokerage IH Securities, highlighted that brokerages have experienced a substantial hit to earnings, with some seeing their revenues drop by at least 50%.

Stockbrokers in the capital, Harare, described the current market conditions as “a painful early winter,” marked by limited trading volumes and uncertainty. They anticipate broader ramifications across the stock market architecture, affecting not only stockbrokers but also custodians, government taxes, and the Zimbabwe Stock Exchange itself.

Enock Rukarwa, a research and investment consultant at FBC Securities, said stockbroking boutiques need to adapt their business models to mitigate the impact on commission income and pointed out that the majority of the economy still transacting in US dollars.

He suggested that stockbroking boutiques need to adapt their business models to mitigate the impact on commission income.

Imara Asset Management, Zimbabwe’s largest independent brokerage overseeing $100 million in assets, warned of further upheaval in the coming months as share prices adjusted to ZiG.

The company’s CEO and CIO, John Legat and Shelton Sibanda, criticized the decision to adopt ZiG instead of US dollars, considering that many listed businesses operate in USD.

Naira

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

Published

7 hours ago

April 23, 2024

Samed Olukoya

As of April 23rd, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,250 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 N1,290 and sell it at N1,280 on Monday, April 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: N1,250
Selling Rate: N1,240

Naira

Dollar to Naira Black Market Today, April 22nd, 2024

As of April 22nd, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,290 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

1 day ago

April 22, 2024

Samed Olukoya

As of April 22nd, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,290 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 N1,100 and sell it at N1,090 on Friday, April 19th, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined 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.