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Pound Falls for Second Day as Stops Hit, Construction Slows

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Pound
  • Pound Falls for Second Day as Stops Hit, Construction Slows

The pound declined for a second day against the dollar, tumbling 48 pips in four minutes as stops were hit below $1.2450, as data showed further signs of slowing in the U.K. economy.

Flows were thin overall, with the slide coming as the stops were triggered after a move higher in the euro against the pound, said traders, who asked not to be identified as they weren’t authorized to speak publicly. In mid-March sterling saw similar sharp moves without any accompanying news headlines, plunging in a short span of time on one day and spiking the next. Tuesday’s move came ahead of U.K. construction data that showed expansion in March but at a slower pace than forecast, in the latest assessment of the nation’s economy as it prepares to leave the European Union.

U.K. economic data may be showing “the first signs of cracking,” said Stuart Bennett, head of Group-of-10 currency strategy at Banco Santander SA in London. “The pound is now a bit of a currency that when risk appetite declines, traders club together and say ‘with geopolitical risk, economic risk, Brexit risk, what do we do? We sell the pound.”

  • GBP/USD falls 0.4% to 1.2440, after a 0.5% decline on Monday. Support from 55-DMA at 1.2428 is in jeopardy, according to Vassilis Karamanis, a strategist who writes for Bloomberg
    • Resistance at 1.2496, Asia high; support at 1.2403, March 30 low
  • “Following yesterday’s unexpected decline in manufacturing growth, today’s construction PMI has also disappointed, which is another blow for the pound,” writes Dennis de Jong, MD of UFX.com
    • “Sterling has been very weak over the past nine months and the data simply isn’t giving the beleaguered currency any respite at present”
  • This week’s data range from services PMI to industrial output, following Monday data that showed manufacturing growth unexpectedly cooled for a third month in March
  • EUR/GBP climbs 0.3% to 0.8571, after a 0.7% rise on the previous day
  • For more on major FX technicals, click here
  • Yield on 10-year gilts is little changed at 1.06%, having earlier reached 1.05%, its lowest since October

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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