Forex

Dollar Drops as Euro Bearish Bets Erase Trump-Fueled Rally

Published

7 years ago

March 13, 2017

Dollar Drops as Euro Bearish Bets Erase Trump-Fueled Rally

The dollar traded lower versus most of its Group-of-10 peers on position unwinding after the latest U.S. employment report, while the euro attempted to maintain bullish momentum fueled by a more hawkish-than-expected European Central Bank.

The Bloomberg Dollar Spot Index pared some its losses as traders across Europe noted some intra-day accounts fading the latest dip. The early drop picked up its tone from last week’s close as investors assessed that market pricing reflected three hikes by the Federal Reserve this year and left dollar-bulls looking for signs from this week’s meeting that four hikes may be a serious option for policy makers.

The euro’s outlook remains constructive even as it failed to sustain gains seen early in the day. The change in the ECB’s tone, together with its consideration to increase interest rates before the completion of its bond-buying program, have wrong footed the market. Investors have been closing euro shorts versus the dollar, the Swiss franc and the yen, sending the common currency higher. Yet the move’s steepness, with the Euro Bloomberg Index rising by the most in three months, has seen some range-seeking sellers, traders in Europe noted.

Spot action aside, euro sentiment has become less bearish in the options market as well. Risk reversals on the one-year tenor, which largely overlooks noise from political risks across the currency bloc, show that bearish bets have reversed their course since the U.S. elections in November. They still remain in favor of dollar calls as interest rate differentials matter. On the front-end, bets are close to turning euro-bullish for the first time in four months.

For now, EUR/USD may remain within 1.0645-1.0700 range as a total of EU4.8b worth of expiries roll over Monday
- The pair has shifted to a buy-the-dips approach with large demand seen at 1.0620-40 and circa 1.0600: traders
- Leveraged demand for euro is also seen in the crosses, with order books skewed toward further buying
- EUR/USD hit a fresh one-month high at 1.0714, and dropped near 1.0668, its open level for the day, after short-term names sold into the rally
EUR/CHF managed to rise above 1.0800 handle for the first time in three months as investors closed shorts, in spot and options markets alike
- Shift in ECB tone has eased concerns over a possible move toward the lower band of the SNB’s unofficial 1.05-1.10 corridor that prompted the franc-long positions in the first place
- This could mean a lower need for interventions by the central bank that convenes Thursday; no rate change is expected while no press conference is scheduled
The pound traded higher versus most of its G-10 peers; cable managed to gain as much as 0.6% on the back of model accounts supporting it, after the pair managed to hold support from its post-October flash crash trendline
- Interbank names look to fade any further pound strength amid May’s attempt to silence her fellow party rebellion as she tries to win the power to trigger Article 50. With the market split over the effect of the actual Brexit trigger on the pound, risk reward is seen by some investors in offering rallies in pound crosses: traders
Aussie outperforms, gains versus all G-10 peers; it tests the 38.2% Fibonacci retracement of its drop since Feb. 23; leveraged demand in AUD/NZD also boosts the currency
Yen higher a second day; support from the dollar comes from nearby 55-DMA at 114.27
Expiries Monday in kiwi at 0.6950 (NZ$353m) and 0.7000 (NZ$371m) may anchor price action: DTCC
Some information comes from FX traders familiar with the transactions who asked not to be identified because they are not authorized to speak publicly

Up Next

Naira Appreciates Across Forex Market

Don't Miss

Asian Stocks Gain, Dollar Weakens While Oil Slides

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.

Comments

Naira

Dollar to Naira Black Market Today, April 25th, 2024

As of April 25th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,300 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

6 hours ago

April 25, 2024

Samed Olukoya

Naira to Dollar Exchange- Investors King Rate - Investors King

As of April 25th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,300 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 N1,260 and sell it at N1,250 on Wednesday, April 24th, 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.

Black Market Dollar to Naira Exchange Rate

Buying Rate: N1,300
Selling Rate: N1,290

Naira

Dollar to Naira Black Market Today, April 24th, 2024

As of April 24th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,260 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

1 day ago

April 24, 2024

Samed Olukoya

As of April 24th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,260 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 N1,250 and sell it at N1,240 on Tuesday, April 23rd, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined slightly 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: N1,260
Selling Rate: N1,250

Naira

Nigeria’s Naira Dips 5.3% Against Dollar, Raises Concerns Over Reserve Levels

Published

1 day ago

April 24, 2024

Samed Olukoya

Nigerian Naira depreciated by 5.3% against the US dollar as concerns over declining foreign reserves raise questions about the central bank’s ability to sustain liquidity.

The local currency has now declined for the third consecutive day since the Naira retreated from its three-month high on Friday shortly after Bloomberg pointed out that the Naira gains were inversely proportional to foreign reserves’ growth.

According to data from Lagos-based FMDQ, the naira’s value dropped precipitously, halting its recent impressive performance.

The unofficial market saw an even steeper decline of 6%, extending the currency’s retreat over the past three trading days to a staggering 17%.

Abubakar Muhammed, Chief Executive of Forward Marketing Bureau de Change Ltd., expressed concerns over the sharp decline, highlighting the insufficient supply of dollars in the market.

Muhammed noted that despite a 27% increase in traded volume at the foreign exchange market on Monday, the supply remained inadequate, forcing the naira to soften further while excess demand shifted to the unofficial market.

The dwindling foreign exchange reserves have been a cause for alarm, with Nigeria’s gross dollar reserves steadily declining for 17 consecutive days to reach $32 billion as of April 19, the lowest level since September 2017.

This worrisome trend has raised questions about the adequacy of dollar inflows to rebuild reserves, especially after the central bank settled overdue dollar obligations earlier in the year.

Samir Gadio, Head of Africa Strategy at Standard Chartered Bank, pointed out that while the naira had been supported by onshore dollar selling, the rally was likely overextended.

Gadio warned that the emergence of a dislocation in the market, with domestic participants selling dollars at increasingly lower spot levels was unsustainable and necessitated a correction.

The central bank’s efforts to stabilize the naira have been evident with interventions aimed at improving liquidity.

However, the effectiveness of these measures remains uncertain, particularly as the central bank offered dollars to bureau de change operators at a rate 17% below the official rate tracked by FMDQ.

Analysts, including Ayodeji Dawodu from Banctrust Investment Bank, foresee further challenges ahead, predicting that the naira will likely stabilize around 1,500 against the dollar by year-end.

Dawodu emphasized the importance of stabilizing the currency to attract strong foreign capital inflows, underscoring the significance of sustainable monetary policies in Nigeria’s economic recovery.

As Nigeria grapples with the repercussions of the naira’s depreciation and declining foreign reserves, policymakers face mounting pressure to implement measures that ensure stability and foster confidence in the economy.

The road ahead remains uncertain, with the fate of the naira intricately tied to Nigeria’s ability to address underlying economic vulnerabilities and bolster investor trust.