- Caution Reigns as U.S. Politics Takes Center Stage
Growing concerns over the turmoil engulfing President Donald Trump’s administration weighed on risk appetite, boosting the yen and gold and sending stocks lower.
S&P 500 Index futures declined with European and Asian equities on reports that Trump asked FBI Director James Comey to drop an investigation into former National Security Adviser Michael Flynn. The dollar was already in retreat after a report that the U.S. president shared terrorism intelligence with Russian officials, an action he has since defended. The Bloomberg Dollar Spot Index dropped for a sixth day, crude extended losses and volatility indexes climbed.
“If he’s preoccupied defending himself and if it goes a lot further, then any hope of his legislative agenda coming to the fore is going to be reduced,” John Stopford, the London-based head of fixed-income at Investec Asset Management Ltd., said in an interview with Bloomberg TV.
“Clearly at the margin it’s a negative. At the moment there’s a classic environment for yields to rally a bit further and for the dollar to sell off.”
After a protracted period of dormancy, financial markets are beginning to react to developments in Washington in a more unified manner. With stock and bond volatility muted, investors have looked for a clearer reaction to the political din in currency markets. The U.S. currency now sits at its lowest level since the day of Trump’s shock win, a retracement some blame on perceptions his legislative agenda faces deeper challenges.
Even here, though, traders have been divided on what is moving the U.S. currency, with some seeing catalysts beyond politics. One explanation for the retreat might be weaker-than-expected readings on U.S. inflation and economic growth in the past month, data that have coincided with easing perceptions of political and economic risks in Europe. While traders continue to price in two interest rate increases by the Federal Reserve this year, speculation is rising that European counterparts are preparing to withdraw their own stimulus measures.
“The only political calibration the Fed has is how much Trumponomics we were going to get that they can’t see yet,” Neil Dwane, global strategist at Allianz Global Investors, said in an interview with Bloomberg TV. Even so, U.S. policymakers “are in the mindset to raise as long as the markets are prepared for it,” he said.
Daily Naira Exchange Rates; Friday, January 15, 2021
The Nigerian Naira remained under pressure against the United States Dollar at N475 exchange rate, while the value has not improved against the Euro and Pound, inflation rose to 15.75 percent in the month of December to further compound Nigeria’s predicament.
Bureau De Change Naira Rates
Central Bank of Nigeria’s Official Naira Rates
|1/15/2021||SOUTH AFRICAN RAND||24.8724||24.9052||24.938|
Naira Drops to N394.67 Against US Dollar on I&E FX Window
Economic uncertainties amid the rising number of COVID-19 continues to weigh on the Nigerian Naira across key foreign exchange markets.
The Nigerian Naira depreciated against the United States Dollar on the Investors and Exporters (I&E) Foreign Exchange Window on Thursday.
The local currency depreciated by 0.34 percent to N394.67 per US Dollar, down from N392.69 it opened the day.
On Thursday, investors exchanged $215.63 million on the I&E window.
Despite efforts to ease forex scarcity with $20 billion diaspora remittance, the Naira continued to fall against global counterparts due to weak remittance inflows from developed nations.
Like other nationalities, Nigerians in the diaspora are struggling with lockdowns, surged in the unemployment rate and the drop in global earnings.
Also, weak foreign reserves amid rising debt servicing and other expenditures are hurting the central bank’s ability to intervene effectively across the foreign exchange markets as usual.
Stanbic IBTC Shut Down Bureau De Change Business
Stanbic IBTC Holdings Plc has shut down its bureau de change subsidiary, Stanbic IBTC Bureau De Change Limited (Stanbic IBTC BDC) due to the change in foreign exchange inflow policy.
It should be recalled that the Central Bank of Nigeria (CBN) adjusted the policy of diaspora remittance inflow to stimulate growth and ease forex scarcity across the nation.
Therefore, Stanbic IBTC said the decision to discontinue its bureau de change operations was because of the recent changes in diaspora inflow that now affords customers the opportunity of purchasing foreign exchange (PTA and BTA) directly from Stanbic IBTC Bank at any of its branches nationwide.
In a statement signed by Chidi Okezie, Company Secretary, Stanbic IBTC, said the bureau de change business was discontinued effective from 01 January 2021 through relinquishing of its operating license.
“The intention is to repurpose this subsidiary for other business ventures in the near future, and stakeholders would be duly notified when all engagements have been concluded in this regard,” it stated.
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