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Asian Currencies Tumble to Seven-Year Low Amid Stock Outflows

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  • Asian Currencies Tumble to Seven-Year Low Amid Stock Outflows

A gauge of Asian currencies reached its weakest level since April 2009 as the dollar’s strength prompts investors to sell emerging-market assets.

All major Asian currencies have declined against the U.S. dollar since Donald Trump’s unexpected win in the U.S. presidential election on Nov. 8. Malaysia’s ringgit and South Korea’s won lost at least 2.8 percent each. A gauge of the greenback erased its losses this year as U.S. Treasury yields surged on speculation Trump’s pro-growth policies will stoke inflation.

“What’s driving the weakness in Asian currencies are the higher U.S. bond yields,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd. in Singapore. “Higher U.S. yields tend to be negative for capital flows in the region. On top of that there’s also a general uncertainty about Trump and his administration’s foreign policy toward Asia, China in particular.”

The Bloomberg-JPMorgan Asia Dollar Index dropped 1.6 percent since Nov. 8, taking this year’s loss to 1.9 percent. The gauge declined 0.1 percent to 104.29 as of 10:37 a.m. in Singapore on Tuesday, after touching the 104.26, the weakest level since 2009.

Funds based overseas have withdrawn in total this month a net $5.3 billion across six of the region’s stock markets, including India, South Korea and Taiwan, exchange data show. They cut their holdings of Thai bonds by $816 million.

U.S. 10-year yields have risen 36 basis points to 2.21 percent since the presidential vote. Traders see a 92 percent chance the Fed will raise interest at its December meeting, up from 76 percent odds on the Friday before the election, according to data compiled by Bloomberg based on futures.

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.

Naira

Naira Closed at N411.25 to US Dollar at NAFEX Window

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Naira Dollar Exchange Rate - Investors King

The Nigerian Naira declined further against the U.S Dollar on Tuesday ahead of the Ramadan holiday to trade at N411.25 to a single U.S Dollar at the Nigerian Autonomous Foreign Exchange (NAFEX) window.

The local currency plunged as low as N420.23 per dollar during the trading hours of Tuesday despite opening the day at N410.33/US$ before settling at N411.25 to a US dollar.

Investors on the window exchanged $98.33 million on Tuesday.

At the parallel section of the foreign exchange, Naira traded at N483 to a United States Dollar; N673 to a British Pound and N580 to a Euro.

Foreign exchange rates remained largely unchanged at the bureau de change section, with the Naira trading at N482 to a U.S Dollar; N674 to a British Pound and N584 to a Euro.

Several factors continue to weigh on the Nigerian Naira, especially with the foreign reserves hovering around record low and crude oil output not at an optimal level.

Other factors like rising inflation rate and drop in economic activity due to COVID-19 effect on the economy and lack of enough fiscal buffer to cushion the economy.

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Naira

Daily Naira Exchange Rates; Thursday, May 6, 2021

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Naira Exchange Rates - Investors King

Naira depreciated further at the parallel market on Thursday as the local currency traded at N485 to a United States Dollar. The Nigerian Naira exchanged at N676 to a British Pound and N585 to a Euro as shown 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
06/05/2021 480/485 665/676 575/585 62/69 395/405 292/320

Bureau De Change Naira Rates

Date

USD

GBP

EURO

NGN

BUY/SELL

BUY/SELL

BUY/SELL

06/05/2021

475/482

663/676

575/587

06/05/2021

475/482

663/676

575/587

Central Bank of Nigeria’s Official Naira Rates

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Forex

CBN Extends N5/$ Incentive Period to Boost Dollar Inflow

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Godwin Emefiele - Investors King

The Central Bank of Nigeria (CBN) has extended the N5 per US Dollar incentive on forex remittance indefinitely to boost liquidity and further deepen economic recovery.

The initiative was scheduled to end on May 8. It was introduced to encourage recipients of dollars to use formal banking channels and help the central bank capture such inflows to boost the stability of the local currency, which has been under pressure after oil prices plunged last year.

“We hereby announce the continuation of the scheme until further notice,” the regulator said in a statement on its website on Thursday.

The naira has been devalued three times since last year after a sharp drop in oil earnings, which accounts for 90% of foreign-exchange inflows, and remittances from workers abroad led to a dollar crunch in the West African nation, which produces the most crude in Africa. The local unit traded for 410.31 on the investors and exporters window, also called Nafex, as of 8:51 a.m. in Lagos.

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