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The Euro-Dollar Parity Bet Is Back

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Euro-Dollar
  • The Euro-Dollar Parity Bet Is Back

Donald Trump’s electoral upset has breathed new life into the bet that diverging economic paths will drive the euro toward parity with the dollar for the first time since 2002.

Traders see about a 45 percent chance the European currency will sink to $1 by the end of 2017, about double the probability assigned a week ago, data compiled by Bloomberg show. The president-elect’s pledges to boost spending and cut taxes are fueling speculation that economic growth will accelerate, pushing the Federal Reserve to raise interest rates more quickly. That sentiment sent a gauge of the dollar to the strongest since February on Monday, while the euro fell to about $1.07, its lowest level this year.

For Deutsche Bank AG, the world’s fourth-biggest currency trader, the election results are enough to jolt the euro out of a range it’s been stuck in for months and push it below $1 in 2017. Calls for parity crumbled this year as the Fed cut back on the number of expected rate hikes, even as the European Central bank continued to add unprecedented amounts of stimulus. Now Trump’s win is rekindling the wager that drove the dollar to back-to-back annual gains in 2014-2015, for its biggest two-year rally since the euro’s 1999 debut.

“Divergence is back,” George Saravelos, a strategist at Deutsche Bank in London, wrote in a report dated Nov. 13. “The Trump victory has changed things.”

2002 Echo

Saravelos forecasts the euro will drop to $1.05 by year-end and 95 cents by the end of 2017, which would be its weakest since June 2002. The consensus on Wall Street is still for a stronger euro. The shared currency will climb to $1.11 by the end of 2017, according to the median forecast in a Bloomberg survey.

The dollar’s strength in recent days runs counter to the consensus before the presidential election — that a Trump victory would spur a rout in the U.S. currency as investors anticipated financial-market volatility that might cause the Fed to delay rate increases. The focus turned instead to the potential for economic stimulus. The Republican’s pledges include spending from about $500 billion to $1 trillion over a decade on roads, bridges and airports.

Traders assess about a 92 percent probability to a Fed hike next month, up from 80 percent on Nov. 7, according to data compiled by Bloomberg based on fed funds futures. The calculation is based on the assumption the effective federal funds rate will trade at the middle of the new range after the central bank’s next increase. Higher rates tend to boost the appeal of holding money in a given currency.

Yield Appeal

Deutsche Bank forecasts the dollar will rank among the the highest-yielding currencies in the Group-of-10 nations if the Fed raises rates next month. The extra yield on U.S. 10-year notes relative to German equivalents is already the highest since at least 1990.

Against a backdrop of a strengthening U.S. job market, hedge funds and other large speculators signaled confidence in the dollar’s outlook heading into the election. They raised net bullish bets on the greenback to about 221,000 contracts in the week through Nov. 8, the highest since February, according to Commodity Futures Trading Commission data.

“We see parity sometime in the first quarter of 2017,” said Enrique Diaz-Alvarez, chief risk officer at foreign-exchange broker Ebury in New York. “Trump’s policies of pushing fiscal expansion on an economy that is near full employment are going to be met by a faster pace of hikes than there would have been otherwise.”

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

Dollar to Naira Today December 9, 2021

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Naira - Investors King

Dollar to Naira exchange rate at the official foreign exchange section and the black market rate as of today December 9, 2021.

Dollar to Naira Official Rate

Naira opened the day at N413.71 to a United States Dollar on Thursday at the official forex market, the Investors and Exporters Forex Window managed by the FMDQ Group.

That was better than the N415.06 it closed against the U.S Dollar on Wednesday. Investors transacted N225.99 million during the trading hours of Wednesday.

While the Naira traded at N444 to a US Dollar at the forex spot market and N453.15 at the forex forward market.

Dollar to Naira Exchange Rate at Black Market

The Naira remained pressured at the parallel market, popularly known as the black market. The Nigerian Naira was sold at N567 and bought at N562 to a United States Dollar on Thursday, December 9th, 2021, according to various bureau de change sources.

Activity at the black market has been blamed for Nigeria’s unstable forex market and multiple exchange rates. The Central Bank of Nigeria does not authorise black market transactions.

Central Bank of Nigeria Exchange Rates

The Central Bank of Nigeria (CBN) official exchange rates as of yesterday are shown below.

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Naira

Exchange Rate: Dollar to Naira Today, Friday 3 December 2021

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The Nigerian Naira remained under pressure across the board despite efforts by the Central Bank of Nigeria (CBN) to prop up the value of the local currency against its global counterparts.

Backed by Nigeria’s foreign reserves, Naira plunged from N306 against the United States Dollar to N414 at the official forex window during the peak of COVID-19 when crude oil dropped to $15 a barrel and eroded Nigeria’s foreign exchange earnings.

Since then, Africa’s largest economy has instituted various forex policies to support the Naira, deepen economic productivity and generally grow activity across key sectors. However, the lack of a stable foreign exchange market has impeded capital importation needed to prop up Naira value as foreign investors continue to stay off the Nigerian market according to the World Bank.

Naira to Dollar Exchange Rate Official Fx Window (FMDQ)

On Thursday, December 2, 2021, the Nigerian Naira opened at N413.94 against the United States Dollar at the Official Forex Window managed by the FMDQ Group.

The local currency sheds 0.06 percent to a greenback by the close of business on Thursday, closing at N414.80 to a United States Dollar.

Analysing the forex spot market, Naira rose to as high as N404 against the American Dollar during the trading house of Thursday before plunging to N444. Trading activity dropped on Thursday as investors traded $139.69 million US dollars, in contrast to $223.8 million transacted on Wednesday.

Naira Black Market Exchange Rates

At the unregulated forex market, the Naira exchanged hoarders and speculators are exchanging the Naira at N558 to United States Dollar.

This was in spite of the CBN efforts at shutting down activity at that section of the forex market given its damages to the nation’s forex market and the fact that Nigerians were almost adopting the black market rate as the official rate.

Experts, including the Vice President, Yemi Osinbajo have blamed the Central Bank of Nigeria for existing of the black market. According to the Vice President, as long as the forex arbitrage exists due to the numerous forex rates, speculators, hoarders and other forex traders will continue to sustain the unregulated black market.

Central Bank of Nigeria’s Official Naira Rates

The CBN quoted rates are the rates the apex bank sells various currencies to Deposit Money Banks (DMBs) in Nigeria. The DMBs are however expected to add between N1 to N2 on each rate to cover costs when selling to customers.

Nigerian Naira (NGX) to Bitcoin (BTC)

Bitcoin, the world’s most dominant cryptocurrency, lost 0.13 percent against the Naira to N23.299 million or $56,833 in the last 24 hours.

Against Ethereum (ether), the second most capitalised cryptocurrency, the Naira gained 0.15 percent to N1.874 million.

GTBank Naira Exchange Rates

As of December 2, 2021, GTBank exchanged the Naira to the US Dollar at N480. While the Euro, the Canadian Dollar and the Great Britain Pound were traded at N549, N366 and N649, respectively since August 20, 2021. See other Naira exchange rates below.

Currency Rate Date
USD ₦ 480 02/12/2021
EUR ₦ 549 20/08/2021
CAD ₦ 366 20/08/2021
GBP ₦ 649 16/08/2021

Access Bank Naira Exchange Rates

Currency Rate Date
USD ₦ 450 17/11/2021
EUR ₦ 531 31/08/2021
GBP ₦ 621 27/08/2021
CAD ₦ 357 18/08/2021
ZAR ₦ 31 18/08/2021
INR ₦ 6 18/08/2021
TRY ₦ 52 18/08/2021
AUD ₦ 299 01/05/2021
RUB ₦ 7.10 01/05/2021
SGD ₦ 268 01/05/2021
AED ₦ 109 26/11/2020
XOF ₦ 800 15/08/2020

Sterling Bank Naira Exchange Rates

Currency Rate Date
USD ₦ 480 18/11/2021
GBP ₦ 619 18/11/2021
EUR ₦ 534 13/09/2021
CAD ₦ 344 20/08/2021

Union Bank Naira Exchange Rates

Currency Rate Date
USD ₦ 414 18/11/2021
EUR ₦ 484 13/10/2021
GBP ₦ 569.3 13/10/2021
CAD ₦ 316 01/05/2021

UBA Naira Exchange Rates

Currency Rate Date
USD ₦ 465 18/11/2021
EUR ₦ 566 31/08/2021
GBP ₦ 622 23/07/2021
CAD ₦ 316 01/05/2021
AED ₦ 119 08/08/2020
INR ₦ 6.06 03/08/2020

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Naira

Naira Sees Stability at Official Window

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Naira - Investors King

The Naira has this week witnessed a steady, unchanged value against the naira as it closed at N415.07 against the dollar on Wednesday (for the fourth straight day), according to the Investors and Exporters window where the Nigerian currency is traded officially.

As mentioned in a previous article, the Naira appears to have found a resting place for its value heading into the festive period. Even though the Naira is now stable, the value may still be too negative for the Nigerian economy, as food prices and prices for other goods keep going on the rise.

The FMDQ group through its website gives updates concerning the currency’s daily trading (opening and closing prices). It also gives updates on the Spot rate and Forward rate; the prices at which the currency trades for transactions throughout that day as well as future transactions which were agreed on that day.

The Spot rate maintained its usual highest value of N404 per dollar, but its lowest value fell as far as N457.02 per dollar. This is considerably lower than the N444 per dollar which it usually attains.

The Forward rate has however seen changes in value, dropping to a high of only N445.97 per dollar, maintaining its lowest price of N457 per dollar.

The FMDQ group also reports the total turnover of the currency in a day, i.e. the total amount of the currency that was traded throughout that day. On Wednesday, it was revealed that the total amount of the dollar that was traded sat at $223.8 million at the close of the day. This is higher than the $152 million which was recorded the previous day.

At the parallel market (which is not recognized by the Central Bank of Nigeria), the Naira was sold at a price of N558 per dollar as it looks to maintain the recovery which it made after hitting an all time low of N575 per dollar in September.

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