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Mobius Foresees Cryptocurrency Crackdown Sparking a Rush to Gold

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An illustration photo shows a Bitcoin (virtual currency) paper wallet with QR codes and a coin
  • Mobius Foresees Cryptocurrency Crackdown Sparking a Rush to Gold

Mark Mobius is sensing danger in the explosive growth of cryptocurrencies.

Governments will begin clamping down on digital currencies because of their use in illicit financing, with terrorist groups to drug dealers contributing to their rise, Mobius, executive chairman at Templeton Emerging Markets Group, said in an interview in Hong Kong Monday.

“Cryptocurrencies are beginning to get out of control and it’s going to attract the attention of governments around the world,” Mobius said. “You’re going to get a reversion back to gold because people are going to wonder, can I really trust these currencies?”

And the crackdown may have already started — at least in China, home to the majority of bitcoin miners.

The People’s Bank of China said Monday that initial coin offerings are illegal and that all related fundraising activity should be halted immediately. The central bank said it has completed investigations into organizations and individuals who have conducted so-called ICOs, and have ruled that such activities disturb financial order and will be banned.

In the U.S., both banks and regulators are studying distributed ledger technology. Federal Reserve officials have made a couple of formal speeches on the topic in the past 12 months, but have voiced reservations about digital currencies themselves.

Bitcoin Falls

Mobius isn’t the only one voicing concern. Bank of America Merrill Lynch was cautious around bitcoin in July, saying there were a lot of obstacles, such as theft and hacking risks, that make it unlikely it will gain the status of pledgeable collateral.

Bitcoin fell more than 10 percent on Monday, after news of the PBOC curbs. While the cryptocurrency is still up more than 360 percent this year and is still within striking distance of its record, it’s also prone to wild swings. Bitcoin surpassed the price for an ounce of gold for the first time in March.

Investors have poured hundreds of millions of dollars into the digital currency market this year alone, with the dollar value of the 20 biggest cryptocurrencies around $150 billion, according to data from Coinmarketcap.com.

“People need a means of exchange and they need to trust that,” said Mobius, who was interviewed before China’s announcement. “Right now the trust is good — with bitcoin people are buying and selling it, they think it’s a reasonable market — but there will come a day when government crackdowns come in and you begin to see the currency come down.”

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Naira

Naira Falls to N1,676.90/$1 at Official Market, Slides to N1,708.87/$1 at Alternative Window

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New Naira notes

The Naira depreciated at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by 0.61 percent and sold against the US Dollar at N1,676.90/$1 on Monday, November 4.

At the official market, the domestic currency recorded a N10.18 drop versus N1,666.72/$1,  valued at the previous session on Friday.

Equally at the black market, the Naira lost N4.76 against the greenback to close at N1,708.87 to the US Dollar compared to N1,704.11/$1 it closed on Friday.

The outcomes came as the weak supply gripping the marker cross paths with high seasonal demand placing pressure on the local currency.

This occurred as supply dropped further at the session as turnover published on the FMDQ Group website stood at $79.47 million indicating that the session’s turnover fell by 15.7 per cent, indicating that there was a decrease of $14.75 million compared to $94.22 million published the previous day.

With the year coming to a close, there has been a higher demand for FX but with the Central Bank of Nigeria (CBN) limiting interventions, constraints have seen a volatile outcome for the local currency.

Equally, the domestic currency also witnessed losses against the British currency and the Euro in the week’s opening session.

On the Pound Sterling, the local currency made a loss of N3.38 to wrap the session at N2,160.63/£1 from N2,157.25/£1 that it sold at the previous session and against the Euro, the Nigerian currency closed at N1,816.40/€1 versus N1,814.79/€1, indicating an N1.61 depreciation.

The local currency also declined in its value against the British currency in the black market as it dropped by N9.63 to sell at N2,217.39/£1 compared with the preceding session’s N2,207.76/£1 and followed the same pattern against the Euro as it depreciated N10.73 to quote at N1,862.98/€1 versus the previous day’s rate of N1,852.25/€1.

The Naira, however, had a different trend against the Canadian Dollar as it appreciated by N1.66 to close at N1,222.33 per Canadian Dollar, compared to Friday’s N1,223.99 per CAD.

CBN’s limited capacity to sufficiently intervene across the market segments and suboptimal inflows from Foreign Portfolio Investors will continue to impact the trajectory of the local currency in coming weeks, analysts said.

Measures that don’t translate to more injection of FX into the pressured market will only provide temporary reprieve, they added.

Meanwhile, the CBN will soon begin to test run its automated FX platform to increase market confidence and reduce speculative trading.

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Naira

Naira Appreciates to N1,666 Per Dollar at FX Market, N1,704.11 at Parallel Market

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Naira Exchange Rates - Investors King

The Naira appreciated by 0.5 percent against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday following an N8.77 rise to close at N1,666.72/$1 compared with Thursday’s closing rate of N1,675.49/$1 despite worsening supply in the market.

The daily supply of FX as measured by secondary data from FMDQ Securities Exchange Limited indicated that turnover fell by $72.41 million or 43.5 per cent to $94.20 million from $166.61 million.

However, the local currency slid on the Pound Sterling and the Euro in the final session. For the British currency, the local currency depreciated by N10.10 and closed at N2,157.25/£1 from N2,147.15/£1 while it closed at the rate of N1,814.79/€1, a slump of N23.43 against N1,791.36/€1 against the Euro.

Meanwhile, the Naira rose further by N7.66 against the American in the parallel market segment to close at N1,704.11 to the US Dollar compared to N1,711.77/$1 it closed on Thursday.

Also, the domestic currency extended its gain against the British currency during the final session as the Naira made a further appreciation of N16 to trade at N2,207.76/£1 from N2,223.76/£1 that it sold at the previous session and against the Euro, it appreciated N14.82 to close at N1,852.25/€1 versus the previous day’s rate of N1,867.07/€1.

The local currency gained a marginal N1.62 to close at N1,233.99 per Canadian Dollar, compared to Thursday’s N1,235.61 per CAD.

The Central Bank of Nigeria (CBN) at the recently concluded World Bank/IMF meetings held in Washington, DC last week said the foreign exchange market will not depend on the apex bank’s intervention for supply and stability.

This is evidenced by the stop of sales of Dollars to the market as it plans to improve supply organically without its intervention from time to time while maintaining balance in the market.

“While you might see us intervene from time to time, we are trying to ensure the market is not dependent on the intervention of the central bank.

“I think that we are looking at conditions that market return as much as possible to improve supply organically without the Central Bank having to put in money all the time,” the CBN deputy governor on economic policy, Mr Mohammed Abdullahi, disclosed.

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Naira

Naira Loses 2.7% on Dollar at NAFEX, Gains N6 to N1,711/$1 at Parallel Market

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New Naira Notes

The Naira fell by 2.7 percent on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEX) to exchange at N1,675.49/$1 on Thursday, October 311 as the local currency depreciated despite a slight increase in supply.

In the official market, the domestic currency lost N44.32 on the American currency in the official market versus N1,631.17/$1, which it closed in the previous session on Wednesday.

In a turn of fortune, the Naira rose N6.66 against the greenback in the parallel market segment to close at N1,711.77 to the US Dollar compared to N1,718.43/$1 it closed on Wednesday.

Data showed a rise in supply as the turnover published on the FMDQ Group website stood at $166.61 million indicating that the session’s turnover jumped by 29.2 per cent, indicating a rise of $37.63 million compared to $128.98 million that was published in the last trading session.

Equally, the Naira weakened its value against the Pound Sterling in the official market by N3.75 to sell at N2,147.15/£1 compared with the preceding session’s N2,143.40/£1.

It followed the same path against the Euro, depreciating N9.29 to quote at N1,791.36/€1 versus midweek’s closing rate of N1,782.07/€1.

In a different outcome in the black market, the domestic currency headed up against the British currency during the Thursday session as the Naira made an appreciation of N10.86 to wrap the session at N2,223.76/£1 from N2,234.62/£1 that it sold at the previous session.

However, the Naira followed a different pattern against the Euro as it depreciated N12.51 to close at N1,867.07/€1 versus the previous day’s rate of N1,854.56/€1.

The local currency gained a marginal 9 Kobo to close at N1,235.61 per Canadian Dollar, compared to Wednesday’s N1,235.70 per CAD.

Investors King reports that the Nigerian macro environment is placing pressure on the FX market with latest data showing that there is a high money supply in the system complemented by a wider government budget deficit.

The Central Bank of Nigeria (CBN) revealed that Nigeria’s money supply often known as M3 grew 62.8 percent in the last one year to N109 trillion from N66.9 trillion in September 2023.

 

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