Forex

Aussie Bulls Short Kiwi as RBNZ Talks Tough Before Election

Published

7 years ago

August 11, 2017

Aussie Bulls Short Kiwi as RBNZ Talks Tough Before Election

As the Aussie falters in its rally against the greenback, bulls may find a better bet by backing it against the New Zealand dollar.

The Aussie may advance this year to NZ$1.15, a level last seen in 2013, as the Reserve Bank of Australia will probably raise rates before its counterpart as the larger economy proves to be more resilient, according to Eaton Vance Corp., which oversees about $395 billion. At the same time, the kiwi is coming under pressure as the Reserve Bank of New Zealand took a tougher tone on the currency on Thursday, a first step toward possible intervention.

“RBA will continue to act more hawkishly than the market expects, and RBNZ more dovishly,” said Eric Stein, Boston-based co-director of global fixed income at Eaton Vance. “The Australian economy is outperforming the New Zealand economy from a cyclical perspective.”

As New Zealand tussles with a slowing housing market and weaker-than-expected inflation, Australia has benefited from a surge in the prices of iron ore, its biggest export earner, and improving business confidence. RBA’s Governor Philip Lowe said on Friday the central bank is prepared to intervene only in “pretty extreme” situations, highlighting the different approaches taken by the two monetary authorities.

“Where we do see some value in playing rising intervention risk in the New Zealand dollar is by pairing it with the Aussie,” Adam Cole, chief currency strategist at Royal Bank of Canada, wrote in a report Friday. “The RBNZ’s history of currency management and its specific mandate for FX intervention contrast strongly with the RBA’s hands off approach to FX and is another reason why the two-month trend higher in Aussie-kiwi could extend further.”

Australia’s dollar has gained more than 4 percent against the kiwi to around NZ$1.0803 in Sydney Friday, since touching a five-month low on June 26. The Aussie has lost 1.9 percent against the U.S. dollar this month after surging as much as 10 percent from a May low.

The kiwi could also be buffeted by an upset in the general election in September, with approval for new opposition leader Jacinda Ardern gathering pace. The first major poll since she was chosen showed that support rose 9 points to 33.1 percent.

The Aussie will probably climb above NZ$1.10 before the Sept. 23 election, according to Keith Dack, a hedge-fund manager who has more than 30 years of trading experience. “The election in New Zealand has taken on a new dimension with Labour changing leadership,” said Dack, a senior portfolio manager at Kit Trading Fund in Singapore.

No party has won an outright majority since New Zealand introduced proportional representation in 1996, and governments are formed with the support of smaller partners.

New Zealand’s bond yield premium over Australia narrowed this week to about 17 basis points, the least since 2013, even as swaps traders bet that policy makers in both countries will keep rates on hold until August 2018.

While the RBA has also warned that a stronger currency will weigh on growth, an improving economy spurred the central bank this month to bring forward its projection for underlying inflation to reach around 2 percent to the second half of 2017.

Leveraged funds increased their bullish Aussie wagers in the week ended Aug. 1 to 60,601 contracts, the most since 2013. They trimmed kiwi net-long positions to 36,234 from as high as 36,906 in mid-July, which was a record in data compiled by Bloomberg starting in 2006.

The Aussie “looks cheap historically” against the kiwi, said Greg Gibbs, founder of Amplifying Global FX Capital in Breckenridge, Colorado, citing Australia’s strong external position, commodity prices and activity indicators. While Australia’s housing market is holding up well, New Zealand’s is cooling, and the smaller neighbor could be heading for a more unstable coalition government next month, he said.

“I do not see NZ$1.10 as a stretch,” he said.

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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.

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Forex

Yen Hits 34-Year Low Against Dollar Despite Bank of Japan’s Inaction

Published

17 hours ago

April 26, 2024

Samed Olukoya

The Japanese yen plummeted to a 34-year low against the US dollar, sending shockwaves through global financial markets.

Despite mounting pressure and speculation, the Bank of Japan (BOJ) chose to maintain its key interest rate.

The yen’s relentless slide, extending to 0.7% to 156.66 against the dollar, underscores deep concerns about Japan’s economic stability and the efficacy of its monetary policies.

BOJ Governor Kazuo Ueda’s remarks at a post-meeting news conference did little to assuage fears as he acknowledged the impact of foreign exchange dynamics on inflation but downplayed the yen’s influence on underlying prices.

Investors, already on edge due to the yen’s dismal performance this year, are now bracing for further volatility amid speculation of imminent intervention by Japanese authorities.

The absence of decisive action from the BOJ has heightened uncertainty, with concerns looming over the potential repercussions of a prolonged yen depreciation.

The implications of the yen’s decline extend far beyond Japan’s borders, reverberating across global markets. The currency’s status as the worst-performing among major currencies in the Group of Ten (G-10) underscores its significance in the international financial landscape.

Policymakers have issued repeated warnings against excessive depreciation, signaling a commitment to intervene if necessary to safeguard economic stability.

Finance Minister Shunichi Suzuki reiterated the government’s readiness to respond to foreign exchange fluctuations, emphasizing the need for vigilance in the face of market volatility.

However, the lack of concrete action from Japanese authorities has left investors grappling with uncertainty, unsure of the yen’s trajectory in the days to come.

Market analysts warn of the potential for further downside risk, particularly in light of upcoming economic data releases and the prospect of thin trading volumes due to public holidays in Japan.

The absence of coordinated intervention efforts and a clear policy stance only exacerbates concerns, fueling speculation about the yen’s future trajectory.

The yen’s current predicament evokes memories of past episodes of currency turmoil, prompting comparisons to Japan’s intervention in 2022 when the currency experienced a similar downward spiral.

The prospect of history repeating itself looms large, as market participants weigh the possibility of intervention against the backdrop of an increasingly volatile global economy.

As Japan grapples with the yen’s precipitous decline, the stakes have never been higher for policymakers tasked with restoring stability to the currency markets. With the world watching closely, the fate of the yen hangs in the balance, poised between intervention and inertia in the face of unprecedented challenges.

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

2 days 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

3 days 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.