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Forex

Brexit Saga Hits Pound

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British pound
  • Brexit Saga Hits Pound

Sterling slid below $1.20 for the first time in more than three months after newspapers reported that May will signal in a speech on Tuesday her willingness to quit the European Union’s single market for goods and services to regain control of Britain’s borders and laws. It’s the outcome seen by many economists as the least desirable, and the one currency traders have fretted about since the U.K.’s June vote to leave the bloc.

“The main source of inflation does seem to be sterling and the pass-through is very clear and we’ve broken some key levels,” Steven Major, global head of fixed income research at HSBC, said on Bloomberg Television. “The question is whether it affects what the Bank of England is thinking or whether they view it as transitory.”

The pound slid as much as 1.6 percent to $1.1986, dropping to the weakest since the “flash crash” of Oct. 7. It was at $1.2056 at 12:37 p.m. London time. Inflation expectations climbed, with the 10-year break-even rate, a gauge of the bond market’s outlook for U.K. price growth over the next decade, touching the highest since July 2013.

Government officials told the Sunday Times that they expect May’s comments to cause a “market correction.” The BOE declined to comment on the contents of Carney’s address.

Currency Effects

On the day May speaks, data will probably show inflation accelerated to 1.4 percent in December from 1.2 percent. While that’s below the BOE’s 2 percent target, it’s forecast to breach that level within months as the pound’s 19 percent slide since the referendum feeds through to import prices.

The latest decline in sterling means BOE officials may have to make the uncomfortable decision between tolerating an even bigger inflation overshoot or tightening policy — even if that causes more short-term pain — to keep price-growth in check. The central bank will publish new forecasts for growth and inflation on Feb. 2, when it is also scheduled to announce its next policy decision.

The Monetary Policy Committee members have a neutral bias on where rates will go next as they monitor the economic fallout from the decision to quit the EU. While the referendum initially spurred them to cut interest rates and resume asset purchases, and to signal that another rate cut was likely, their stance changed after the economy proved more robust than expected.

The BOE is probably still some way from a rate change. The median forecast of economists is for no change from the current record-low 0.25 percent until at least the second quarter of 2019. When that move comes, there’s a higher chance of a hike, according to a survey conducted last week.

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

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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US Dollar

Dollar Falls as Risk Appetite Improves, Sterling Dips on BoE

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US Dollar - Investorsking.com

The dollar dropped to its lowest point in three days on Thursday as global market risk appetite improved, while sterling zig-zagged after the Bank of England slowed the pace of its bond-buying, but left interest rates unchanged.

Fewer Americans filed new claims for unemployment benefits last week, data showed, as COVID-19 vaccination efforts and massive amounts of government stimulus led to a further reopening of the economy.

While the U.S. economy has been gaining steam, Federal Reserve speakers on Wednesday downplayed the risks of higher inflation.

Those statements reinforced “the lower-for-longer mentality with regards to interest rates,” making the greenback less appealing, said Neil Jones, head of FX sales at Mizuho.

The safehaven U.S. dollar was last down 0.31% at 91.977 against a basket of peer currencies.

“What we’ve seen early in New York is a little bit of back-and-forth gyrations, just because of the Bank of England meeting,” said Erik Bregar, director and head of FX strategy at the Exchange Bank of Canada.

The Bank of England said it would slow the pace of its bond-buying as it sharply increased its forecast for Britain’s economic growth this year after its coronavirus slump, but it stressed it was not tightening monetary policy.

“They kept their QE target in place but they said they are going to reduce the weekly pace of purchases, but that’s not a signal and so sterling has kind of gone up and down and done nothing at the end of the day,” Bregar said.

The pound was last down 0.08% against the weaker dollar at $1.3900 .

The euro was up 0.47% versus the dollar at $1.2061 , and up 0.65% against the pound, at 86.88 pence per euro.

Investors were also paying attention to elections in Scotland that could herald a political showdown over a new independence referendum.

The Australian dollar fell sharply overnight when China said it would stop its economic dialogue with Australia, but the currency had recovered to trade close to flat on the day as European markets opened.

The Aussie was up 0.1% versus the U.S. dollar at 0.77515 at 1028 GMT, having hit as low of 0.7701 overnight.

The New Zealand dollar also dropped and was down 0.1% on the day.

“The announcements of the formal suspension of the economic dialogue between China and Australia should not have a lasting impact on markets given the already strained relationship between the two ahead of the event,” wrote ING strategists in a note to clients.

The Canadian dollar hit a three-and-a-half year high, helped by oil price gains and the Bank of Canada’s recent shift to more hawkish guidance.

In cryptocurrencies, ether traded around $3,500 after reaching a record high of $3,559.97 on Tuesday, skyrocketing nearly 800% this month.

Bitcoin declined 0.2% to $57,392.75.

The meme-based virtual currency Dogecoin soared on Wednesday to an all-time high, extending its 2021 rally to become the fourth-biggest digital coin.

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