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Euro Is Nothing But a Flow Show and Analysts Are Getting Worried

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European
  • Euro Is Nothing But a Flow Show and Analysts Are Getting Worried

The euro is on a tear, U.S. investors are snapping up European stocks — and traditional theories to justify the shared currency’s spirited advance have broken down, as investors luxuriate in a climate of low volatility.

That’s the market landscape as painted by Deutsche Bank AG strategist George Saravelos. Given the parallels, he suggests caution after the euro’s 7 percent rally against the dollar this year.

“Something strange has happened to the euro in recent months,” Saravelos wrote in a client note Wednesday. “Almost all traditional drivers that usually ‘explain’ the price action have broken down.”

The bank’s currency correlation model — which includes factors such as interest-rate differentials, the relative performance of equity markets, and spreads of southern European government bonds — is flashing red.

Correlations between the euro’s rolling three-month performance against the dollar and other such factors were last at current subdued levels in early 2014 and 2007. That suggests unhedged equity inflows from foreign investors piling into European equity and bond markets — thanks to better-than-expected economic data, and easing political risk — have driven the currency’s recent outperformance, according to Deutsche Bank.

“Near-term, it suggests that there may be an underlying flow story that is impervious to other market drivers and is supportive of the euro,” Saravelos said. “Medium-term, the current ‘decorrelation’ is usually associated with periods of very low volatility and would suggest caution in extrapolating recent euro strength.”

As such, the German bank, the world’s fifth-largest currency trader by market share according to a Euromoney Institutional Investor Plc, reckons the euro will fail to break out against the top end of its 1.05 to 1.15 per dollar range, as traditional currency drivers re-assert their influence.

Risks to the currency’s bull run are rising: The euro fell as much as 0.67 percent Wednesday after a Bloomberg report on a potential switch in the European Central Bank’s inflation outlook signaled the prospect of a dovish outcome in tomorrow’s policy decision.

The counterpoint comes from Morgan Stanley, which this week raised its target for the single currency citing “material upside surprises in recent growth data, positive political developments and a view that investment inflows to the eurozone will continue.”

Morgan Stanley projects 1.16 per dollar by the second quarter of 2018, a 20 percent upside from its previous forecast, compared with the median projection of 1.13, according to analysts surveyed by Bloomberg.

Linking currency moves to capital flows isn’t straightforward when markets move in lockstep, but an April study by Deutsche Bank suggests currency traders should follow flow data closely: It concluded that outsize inflows into exchange-traded equity funds can predict moves in a number of liquid currencies, including the euro.

Saravelos’s note of caution also finds support from Jens Nordvig, founder of Exante Data, a New York-based research firm.

“Fundamental models for EURUSD, based on rate differentials, would have predicted a relatively stable exchange rate in recent months,” Nordvig, who was ranked No. 1 strategist by Institutional Investor for five years through 2015, in his previous capacity as head of currency research at Nomura Holdings Inc., wrote in a client note. “In our analysis, this ‘euro residual’ is tied to certain flow forces, which have turned euro bullish lately.”

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.

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Forex

CBN Cracks Down: Revokes Licenses of 4,173 Bureaux De Change Operators

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Bureau De Change Operator

The Central Bank of Nigeria (CBN) has revoked the operational licenses of 4,173 Bureaux De Change (BDC) operators across the country.

This action comes as the CBN exercises its authority under the Bank and Other Financial Institutions Act (BOFIA) 2020 and the Revised Operational Guidelines for Bureaux De Change 2015.

The affected BDCs failed to adhere to essential regulatory provisions, including the payment of necessary fees for license renewal, timely rendition of returns, and compliance with CBN directives on Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), and Counter-Proliferation Financing (CPF) regulations.

Sidi Ali, the Acting Director of Corporate Communications at the CBN, explained that the revocation underscores the importance of strict adherence to regulatory guidelines in the financial sector.

The CBN also announced its intent to revise the regulatory and supervisory guidelines for Bureaux De Change operations, with compliance to be mandatory for all stakeholders.

The public has been advised to take note of the regulatory changes and act accordingly.

This crackdown underscores the CBN’s commitment to maintaining the integrity and stability of Nigeria’s financial system through stringent regulatory oversight.

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Naira

Black Market Dollar to Naira Exchange Rate Today, March 1st, 2024

As of March 1st, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,530 NGN in the black market, also referred to as the parallel market or Aboki fx.

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Naira Exchange Rates - Investors King

As of March 1st, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,530 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 N1,480 and sell it at N1,470 on Thursday, February 29th, 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: N1,530
  • Selling Rate: N1,520

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Naira

Black Market Dollar to Naira Exchange Rate Today, February 29th, 2024

As of February 29th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,480 NGN in the black market, also referred to as the parallel market or Aboki fx.

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NAIRA - Investors King

As of February 29th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,480 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 N1,600 and sell it at N1,590 on Wednesday, February 28th, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate improved 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: N1,480
  • Selling Rate: N1,470

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