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Dollar Declines as Stocks Drop; Treasuries Steady

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Bureau Of Engraving And Printing Prints New Anti-Counterfeit 100 Dollar Bills
  • Dollar Declines as Stocks Drop; Treasuries Steady

The dollar declined and Treasury yields fluctuated as President Donald Trump challenged China over what he called unfair trade practices. European stocks fell after a volatile session in Asian markets, while the euro and bund yields rose after the European Commission lifted its growth forecasts.

Basic-resources shares weighed on the Stoxx Europe 600 index following a decline in industrial-metals prices. The EC’s bullish outlook for the region’s economy failed to lift stocks as disappointing results from companies including Siemens AG and Vestas Wind Systems A/S added to the malaise. U.S. stock-index futures signaled a lower open. Equities in Asia earlier rose above their 2007 peak before an intraday reversal in Japanese shares on technically-driven trading pared gains in the region. Sterling fluctuated as Brexit talks resumed, while oil halted a two-day drop.

Investor attention has focused on Asia this week, where Trump has embarked on an 11-day tour. In Beijing Thursday, he said China is taking advantage of American workers and companies with unfair trade practices, but he blamed his predecessors in the White House rather than China for allowing the massive U.S. trade deficit to grow. A year after Trump was elected to president, investors are also reflecting on how financial markets have fared in the interim.

Meanwhile, Brexit talks resume Thursday in Brussels with no indication that a breakthrough is in reach. The EC said economic growth in the U.K. is headed for a prolonged slowdown even as the euro-area economy is forecast to expand at the fastest pace in a decade this year. And in the U.S., tax reform discussions continue. The Senate is due to release a “conceptual mark” of a proposal Thursday, according to a spokeswoman.

Elsewhere, the New Zealand dollar held onto Wednesday’s gains after the central bank flagged it may raise interest rates earlier than expected. Bitcoin soared to another record after a technology upgrade that was threatening to disrupt the biggest cryptocurrency was called off. Nickel led the slump in industrial metals.

Stocks

  • The Stoxx Europe 600 Index sank 0.7 percent as of 12:41 p.m. London time, the lowest in two weeks.
  • The U.K.’s FTSE 100 Index sank 0.6 percent to the lowest in two weeks.
  • Germany’s DAX Index fell 0.9 percent to the lowest in more than a week.
  • Japan’s Nikkei 225 Stock Average fell 0.2 percent.
  • The MSCI Asia Pacific Index gained 0.2 percent to the highest in about 10 years.
  • The MSCI Emerging Market Index increased 0.1 percent to the highest in more than six years.
  • Futures on the S&P 500 Index decreased 0.4 percent to 2,581.50, the lowest in a week.

Currencies

  • The Bloomberg Dollar Spot Index declined 0.2 percent to the lowest in more than two weeks.
  • The euro advanced 0.3 percent to $1.1631, the strongest in a week.
  • The British pound increased 0.1 percent to $1.3129.
  • The Japanese yen climbed 0.4 percent to 113.40 per dollar, the strongest in more than a week.

Bonds

  • The yield on 10-year Treasuries increased less than one basis point to 2.33 percent, the highest in a week.
  • Germany’s 10-year yield climbed five basis points to 0.37 percent, the highest in a week.
  • Britain’s 10-year yield advanced four basis points to 1.263 percent, the highest in more than a week.
  • Japan’s 10-year yield gained less than one basis point to 0.03 percent.

Commodities

  • West Texas Intermediate crude increased 0.1 percent to $56.86 a barrel.
  • Gold gained 0.4 percent to $1,285.90 an ounce, the highest in three weeks.
  • Copper fell 0.8 percent to $3.08 a pound, the lowest in a month.

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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Naira

Nigeria Hits Historic High as Currency in Circulation Surges to N3.69 Trillion

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Nigeria’s currency in circulation surged to a historic high of N3.69 trillion, according to data released by the Central Bank of Nigeria (CBN).

This figure represents an increase of N43.07 billion or 1.18 percent from the total of N3.65 trillion reported in January 2024 and a 13.64 percent year-on-year rise from N3.25 trillion reported in February 2023.

Currency in circulation encompasses the physical cash, including paper notes and coins, actively used in transactions between consumers and businesses within the country.

The latest statistics indicate a considerable uptick in the availability of cash within the Nigerian economy.

The surge in currency supply comes amidst lingering concerns over a potential cash crunch following the monetary policy adjustments by the CBN, particularly the aggressive tightening stance of the Monetary Policy Committee (MPC).

Analysts attribute this spike to various factors, including the fear factor stemming from the cash crunch experienced in 2023 and lingering uncertainties surrounding the administration of physical currency.

Despite the surge in currency in circulation, Nigeria’s economic growth remains sluggish, with projections indicating growth rates of around 2.9 percent to 3.1 percent for 2024.

Also, inflation remains a significant concern, with the headline inflation rate climbing to 31.70 percent in February 2024 from 29.9 percent reported in January 2024, according to data from the National Bureau of Statistics (NBS).

The CBN’s proactive approach to monetary policy, including a historic increase in the monetary policy rate (MPR) to 24.75 percent, underscores the central bank’s commitment to addressing economic challenges and fostering stability amidst persistent pressures.

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Naira

Nigerian Naira Surges to N1,350 per Dollar in Parallel Market

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New Naira notes

The Nigerian Naira has appreciated to N1,350 per dollar in the parallel market, a significant gain from its previous rate of N1,430 per dollar just a day earlier.

Similarly, in the Nigerian Foreign Exchange Market (NAFEM), the naira strengthened to N1,382.95 per dollar, indicating an upward trend across key forex segments.

Data from FMDQ revealed that the indicative exchange rate for NAFEM fell to N1,382.95 per dollar from N1,408.04 per dollar on the previous day, representing a gain of N25.09 for the naira.

This surge in the naira’s value has widened the margin between the parallel market rate and NAFEM to N32.95 per dollar from N21.96 per dollar previously.

Analysts attribute this impressive surge to recent foreign exchange reforms implemented by the Central Bank of Nigeria (CBN).

These reforms, including the consolidation of exchange rate windows and liberalization of the FX market, have contributed to bolstering the naira’s strength against the dollar.

The CBN’s proactive measures aim to promote stability, transparency, and liquidity in the foreign exchange market, fostering confidence among investors and strengthening the national currency.

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CBN Governor Reveals $2.4 Billion Forex Forwards Under Investigation

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Naira Exchange Rates - Investors King

Governor Yemi Cardoso of the Central Bank of Nigeria (CBN) disclosed that law enforcement agencies are currently investigating foreign exchange forwards valued at $2.4 billion.

This announcement came in the wake of the Monetary Policy Committee (MPC) meeting held in Abuja on Tuesday, March 26.

Governor Cardoso shed light on the meticulous forensic audit conducted on these transactions, which uncovered numerous discrepancies, rendering them ineligible for payment.

The CBN, while settling certain tranches of FX backlog, encountered transactions riddled with issues concerning their authenticity.

To address these concerns, Deloitte management consultants were enlisted to conduct a comprehensive forensic analysis spanning several months.

The audit revealed a multitude of irregularities, including allocations disbursed without corresponding requests, lack of proper documentation, and instances of outright illegality.

Cardoso emphasized the gravity of the situation, stating, “We refused to validate them because, apart from the fact that documentation was not satisfactory in many cases, they were outright illegal.”

He underscored the commitment of law enforcement agencies to investigate these transactions thoroughly.

Despite concerns about potential backlogs among stakeholders, Cardoso assured that the market remains open and transparent for addressing any outstanding contractual obligations.

The CBN has diligently verified and settled recognized backlogs of forward transactions.

This revelation comes at a critical juncture as Nigeria grapples with economic challenges, including inflationary pressures.

The MPC’s decision to raise the benchmark interest rate to 24.75 percent reflects efforts to stabilize prices and restore the purchasing power of the average Nigerian.

As investigations unfold and regulatory scrutiny intensifies, the CBN’s commitment to transparency and financial integrity will be closely monitored by stakeholders across the nation.

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