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Yen Extends Slump on BOJ Move; Japanese Shares Gain

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  • Yen Extends Slump on BOJ Move; Japanese Shares Gain

The yen extended the biggest decline in a week and Japanese bonds rose as the nation’s central bank stepped in to buy debt. Japanese shares gained in a day of thin trading across Asia with a slew of markets closed for Lunar New Year celebrations.

The yen dropped for a second day as the BOJ’s move signaled it won’t let 10-year yields rise. The Topix Index rose to within a few points of the highest since December 2015, while Australian shares also climbed. The S&P 500 Index slipped Thursday from an all-time high, while the Dow Jones Industrial Average notched another record. Oil traded above $53 a barrel, while gold was heading for its longest slump in three months.

Signs U.S. expansion remained on uneven footing emerged Thursday, as data showed rising bond yields damped home purchases last month, while jobless claims rose more than forecast. Japanese consumer prices dropped for a 10th straight month, though the pace of declines eased, supporting expectations for a return to inflation later this year.

Markets in China, South Korea, Taiwan and Vietnam will be closed Friday for the start of Lunar New Year. Hong Kong, Malaysia and Singapore will have shortened sessions.

Here are the main moves in markets:

Stocks

  • The Topix rose 0.4 percent as of 11:30 a.m. in Tokyo.
  • Australia’s S&P/ASX 200 Index rose 0.6 percent as the nation’s markets reopened after being closed Thursday for a national holiday. Hong Kong’s Hang Seng Index slipped 0.1 percent, while Singapore’s Straits Times Index added 0.2 percent.
  • The S&P 500 Index slipped 0.1 percent at 2,296.68 on Thursday in New York, after the measure rose past 2,300 for the first time.

Currencies 

  • The yen slid 0.3 percent to 114.89 per dollar, after dropping 1.1 percent the previous session.
  • The Bloomberg Dollar Spot Index added 0.1 percent. It jumped 0.6 percent on Thursday. The measure is headed for a fifth straight weekly decline — the longest stretch since May 2015 — after rising to the highest in more than a decade.
  • The peso dropped 0.5 percent to 21.3179 per dollar, extending Thursday’s 0.7 percent retreat as Mexico’s president canceled a meeting with Donald Trump.

Bonds

  • Japanese 10-year yields fell two basis points to 0.07 percent after the BOJ boosted the amount of 5-to-10-year bonds it buys in its outright purchase operations.
  • Australian 10-year yields jumped six basis points to 2.79 percent, while those on similar-dated New Zealand debt advanced four basis points to 3.40 percent.
  • The yield on 10-year Treasuries was up one basis point to 2.51 percent. It had slipped one basis point on Thursday after an auction of $28 billion in seven-year notes drew a record amount of buying from indirect bidders, signaling interest from foreign central banks and mutual funds.

Commodities

  • Gold retreated 0.2 percent to $1,186.25 an ounce, after dropping 1 percent in New York. It was headed for its fourth straight loss, which would be the longest slump since October.
  • West Texas Intermediate crude was at $53.85 a barrel after surging 2 percent to an almost three-week high as optimism increased OPEC and other producing nations would adhere to their pledged output cuts.

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.

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Travellers to Access $4k , Businessmen $5K as CBN Boosts Forex Supplies

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Nigerians travelling abroad can access a maximum amount of $4,000 foreign exchange from the banks following the Central Bank of Nigeria’s announcement to increase forex supplies.

Sources from some of the banks said those travelling on business trips could also access a maximum amount of $5,000 for each trip.

The CBN had said in a recent statement that it had concluded plans to increase the amount of foreign exchange allocated to banks to meet legitimate needs.

This followed the warning by the CBN Governor, Mr Godwin Emefiele, to Deposit Money Banks to desist from denying customers the opportunity to purchase foreign exchange.

The purposes to access forex included Personal Travel Allowance, Basic Travel Allowance, tuition fees, and medical payments as well as Small and Medium Enterprises transactions or for the repatriation of Foreign Direct Investment proceeds, the CBN had stated.

At a virtual Bankers’ Committee meeting last week, the bankers discussed how the CBN intended to assist with forex to ensure availability for the upcoming summer period and the return of students to school in September.

The CBN also said the BDCs would continue to have their weekly allocations.

The committee observed that the rates were going up.

It stated, “The CBN has said that all the banks must make available at all times and anyone who wants to buy BTA, PTA, medical fees, student school fees and all the eligible invisible purchases to ensure that Nigerians are not forced to go and queue in the parallel market.

“So what the Central Bank is doing is to encourage all banks to make sure that there is available forex at all times, and that his information should be communicated on all our platforms.

“We are asking our customers to come to the branches and for BTA, for example, present the required documents, which are basically your international passport, your visa, your valid ticket and fill up the form in the bank.

“And what we have been instructed to do is ensure that we don’t turn anybody back and that we should request from the Central Bank once we exhaust the forex that we have.

“The idea is to have a hitch-free summer period and the resumption for children to go back to school. The idea is to ensure there is less pressure on the forex and then the rates will come down.”

Speaking during the virtual meeting, the Group Managing Director, Access Bank, Herbert Wigwe, said, “I think again as part of the central bank’s role in terms of price stability and the need to support small and medium enterprises, there was a highlight of the need for banks to go and support SMEs who import small raw materials for them to set up their businesses.”

The Managing Director, Ecobank, Patrick Akinwuntan, said, “All banks are available to ensure forex need is met.”

Managing Director, Sterling Bank, Abubakar Suleiman, said the CBN had provided sufficient foreign exchange to meet the needs of all legitimate Nigerian travellers and therefore, the idea of going to any other market should not arise at all.

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U.S Dollar Gained as Fed Shifts Interest Rates Hike from 2024 to 2023, Crypto Drops

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The United States Dollar gained on Thursday after the Federal Reserve raised inflation expectations to 3.4 percent and moved the year it is expected to raise interest rates from 2024 to 2023.

Policymakers suggested that interest rates could be raised twice by late 2023 given “Summary of Economic Projections” (SEP) released on Wednesday.

The dollar index, which tracks the greenback against six major currencies, gained 0.63 percent to 91.103, its highest since May 6.

The jump was as a result of renewed interest in the American economy as growth is expected to hit 7 percent in 2021 despite the rising inflation. Similarly, economic conditions are projected to improve faster than initially predicted.

The Federal Reserve Chair Jerome Powell said “the economic conditions in the committee’s forward guidance will be met somewhat sooner than previously expected.”

The interesting thing is that the Fed has gone beyond simply acknowledging that inflation is rising and that the U.S. economy has a lot of momentum, and it has essentially shifted to a much more hawkish stance in this set of projections,” said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.

Powell said the central bank will maintain its $120 billion monthly bond-buying program to continue to support the economy but also suggested the possibility of pulling back on quantitative easing used to keep rates low.

I think we’re back to talking about a mild rally in the U.S. dollar and the data becoming very important over the summer period prior to Jackson Hole and September’s meeting,” said Simon Harvey, senior FX market analyst at Monex Europe.

Billions Flow Out of Crypto Market Ahead of Better US Economy

Investors are moving money in billions out of the crypto market, according to Whale Alert reports. On Thursday, 26,999,9990 USDT valued at $26,999,990 was transferred from Binance to an unknown wallet while another 19,999,995 USDT transferred from Bitfinex to an unknown wallet.

Investors moved 20,000,000 USDT to Bitfinex; 55,180 Ether worth $134,030,121 from an unknown wallet to another unknown wallet and 55,000 Ether estimated at $133,389,506 was also transferred to an unknown wallet in the early hours of Thursday.

5,000 Ether worth $12,168,082 and 1,000 Bitcoins worth $38,953,357 were transferred from an unknown wallet to Binance. To see the rest of the money being moved out of crypto space visit Whale Alert.

Cryptocurrency market capitalisation dipped by 5.03 percent in the last 24 hours but has lost $898 billion from $2.523 trillion it attained on Wednesday, May 12, 2021, to $1.625 trillion on Thursday, June 17, 2021.

The plunge in cryptocurrency was a result of improving global economic outlook, especially in the United States of America, the largest crypto investing nation.

The unregulated crypto space is largely treated as a haven asset to avert disaster during the global downturn. Meaning, an improvement in the global economy will generally impact cryptocurrency capital inflow and overall performance. Investors King expects cryptocurrency to extend its decline in the third quarter.

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CBN Raises Customs Forex from N381/US$1 to N404.97/US$

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The Central Bank of Nigeria has raised the Naira exchange rate for cargo clearance from N381/US$1 to N404.97/US$1.

This was confirmed by Uche Ejesieme, the Public Relations Officer (PRO), Tin Can Island Customs Command.

The PRO explained that it was not the customs job description to raise the foreign exchange rate but that of the central bank.

The N24 difference has been implemented on the customs system managed by Web Fontaine.

Commenting on the situation, Kayode Farinto, the Vice President of the Association of Nigerian Licensed Customs Agents, said the increase would further escalate inflation on import goods and hurt consumers’ buying power given the present economic situation.

An importer, Gboyega Adebari, who was shocked at the decision said stakeholders will be greatly affected by the decision.

According to him, “When we went to assess a job this morning, we were told that the exchange rate has been increased, though we have been expecting it, but we don’t expect that it would be so sudden. The implication of this on cargo clearance is that cost of clearance would increase by N24 difference.

“The cargoes that already enroute Nigeria would also be affected, the jobs that we want to clear this morning were affected.

“When you go back to the importer and request for money, they will tell you there is no notification of increase from customs, so the freight forwarders are the ones that would bear the additional cost.”

Naira plunged to N502 against the United States Dollar at the parallel market on Wednesday and traded at N715 to a British Pound and N605 against the European common currency, Euro.

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