Forex

Euro Drops Amid Projections of Left-Wing Win in French Elections

Published

4 months ago

July 8, 2024

The euro experienced a significant decline in early trading on Monday following initial projections indicating a left-wing coalition was poised to win the French legislative elections.

The currency fell as much as 0.4% amid growing concerns about France’s financial future under a government led by the New Popular Front (NPF).

In a surprising turn of events, the NPF emerged as the likely front-runner, contrary to earlier expectations that Marine Le Pen’s far-right National Rally would secure the most seats.

Instead, the National Rally is now projected to come in third, following President Emmanuel Macron’s centrist alliance.

French government bond futures also underperformed compared to their German counterparts, reflecting market anxiety over the potential shift in France’s economic policy.

One of the NPF bloc’s leaders, Jean-Luc Mélenchon, has vowed not to negotiate with other parties to form a government and to stand firm on the coalition’s agenda, which includes substantial increases in public spending. Such measures are expected to create friction with the European Union.

Krishna Guha, a strategist at Evercore ISI, noted the market’s mixed reaction in a client note.

“The show of support for the left/far-left and calls by far-left leader Mélenchon to enact the full hard-left NPF agenda will unsettle some investors,” he wrote.

“But we view the outcome as broadly market-friendly, with National Rally-related risks disappearing for now and the left/far-left NPF set to fall far short of a majority with essentially no prospect of being able to enact its agreed alliance agenda.”

Asian markets reacted to the news with a downturn. Shares in the region retreated, and South Korea’s three-year bond futures reached their highest levels in nearly two years.

In addition, Samsung Electronics Co. workers are expected to initiate a major labor action, the most significant in the company’s history.

Meanwhile, the People’s Bank of China announced it would conduct temporary bond repurchase operations as necessary to maintain adequate liquidity in the banking system. This move is intended to ensure stability amid the broader economic uncertainty.

Traders are also keeping a close eye on upcoming events in the United States. Federal Reserve Chair Jerome Powell’s congressional testimony and new inflation data later this week are anticipated to influence market sentiment further.

Following a soft jobs report, there is increasing speculation that the Federal Reserve might ease policy as early as September.

The recent nonfarm payrolls data indicated a slowdown in US hiring and wage growth, coupled with a rise in the unemployment rate to its highest since late 2021.

This has bolstered expectations of a potential rate cut by the Federal Reserve, adding another layer of complexity to the global economic outlook.

Back in the US, President Joe Biden is facing renewed challenges within his own party as he gears up for a reelection campaign. Despite achieving his best showing in recent polls, Biden continues to navigate a turbulent political landscape.

As the week progresses, market participants will be closely monitoring rate decisions from central banks in New Zealand and South Korea, as well as earnings reports from major US banks, including JPMorgan Chase & Co.

These developments, coupled with Powell’s testimony and subsequent remarks from Fed officials, are expected to provide critical insights into the future direction of economic policy.

In the commodities market, oil prices ticked up ahead of reports from the Organization of Petroleum Exporting Countries and the International Energy Agency, which are expected to shed light on global crude balances.

Also, traders are tracking the path of Tropical Storm Beryl as it approaches Texas, which could impact oil supply and prices.

Gold, on the other hand, eased off the six-week high it reached last week, reflecting the fluctuating market dynamics.

As the political landscape in France and economic indicators globally continue to evolve, investors remain vigilant, adjusting their strategies to navigate the uncertainties ahead.

Up Next

Nigeria’s Foreign Reserves Rebound to $35.05bn Under Tinubu Administration

Don't Miss

Nigerian Banks Face Sanctions for Rejecting Small and Old US Dollar Notes

Samed Olukoya

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.

Comments

Naira

Naira Appreciates 3.6% on US Dollar, Trades N1,600

Published

3 days ago

October 19, 2024

Iyanuoluwa Martins

Naira to Dollar Exchange- Investors King Rate - Investors King

The Naira rose 3.6 percent on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEX) to exchange at N1,600.78/$1 on Friday, October 18 as the local currency appreciated amid an increased supply.

The domestic currency gained N59.71 on the American currency versus N1,660.49/$1, which it closed in the previous session on Thursday.

Data showed a rise in supply as the turnover published on the FMDQ Group website stood at $350.72 million indicating that the session’s turnover rose by 6.2 percent, indicating a rise of $20.54 million compared to $330.18 million that was published in the last trading session.

Meanwhile, the Naira witnessed a flat outcome against the Pound Sterling and the Euro as it closed on the British currency at N2,153.90/£1 and on the European currency at N1,791.06/€1 quoted in the preceding session.

In the Parallel market, the Naira weakened on the American currency as it closed at N1,690.82 to the US Dollar, a drop of N1.31 compared to N1,689.51/$1 it closed during the Wednesday trading session.

In the past months, the Naira has been volatile against the Dollar at the FX market despite interventions by the Central Bank of Nigeria.

The World Bank also said the Nigerian Naira is among the worst-performing currencies in sub-Sahara Africa at the end of August 2024.

In its latest edition of Africa’s Pulse report, the international organisation said the Naira is at par with the Ethiopian Birr, and South Sudanese Pound in terms of decline in the region.

However, the local currency appreciated in its value against the British Pound Sterling in the official market by N54 to sell at N2,201.93/£1 compared with the preceding session’s N2,147.93/£1 and followed the same pattern against the Euro as it gained N4.58 to quote at N1,835.29/€1 versus the previous day’s rate of N1,839.87/€1.

The local currency also depreciated N16.11 to close at N1,217.18 per Canadian Dollar, compared to Thursday’s N1,201.07 per CAD.

Black Market Rate

Naira Gains on Dollar, Pounds, Others at Black Market, Falls at NAFEX

Published

4 days ago

October 18, 2024

Iyanuoluwa Martins

The Naira gained against the US Dollar in the Parallel segment of the foreign exchange market on Thursday, October 17 as it closed at N1,689.51 to the American currency, a gain of N4.41 compared to N1,693.32/$1 it closed during the Wednesday trading session.

The Naira also gained in its value against the British Pound Sterling in the market by N11.19 to sell at N2,147.93/£1 compared with the preceding session’s N2,159.12/£1 and followed the same pattern against the Euro as it appreciated N8.07 to quote at N1,839.87/€1 versus the previous day’s rate of N1,847.94/€1.

The local currency also appreciated N3.59 to close at N1,201.07 per Canadian Dollar, compared to the previous day’s closing value of N1,204.66 per CAD.

Meanwhile, the Naira depreciated marginally for yet another session against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) to N1,660.49/$1.

The local currency rose fell by 0.05 per cent or N91.01 at the window, according to data obtained from FMDQ Securities Exchange compared to N1,659.69/$1 published in the preceding session on Wednesday.

This occurred as supply rose at the penultimate session as turnover published on the FMDQ Group website stood at $330.18 million indicating that the session’s turnover jumped by 86.4 per cent, indicating that there was a decrease of $153.08 million compared to $177.10 million published the previous day.

The surge in supply could be due to peer-to-peer sales as the Central Bank of Nigeria (CBN) has no actively injected liquidity in the market.

Investors King reports that the CBN in August re-introduced the retail Dutch auction system with the aim to sell US Dollar to FX users on demand basis but after the market witnessed more than $1.1 billion injected into the system, there has been slowdown in the auction.

In a different pattern, the local currency closed flat against the Pound Sterling and depreciated on the Euro at the closing session.

Trading against the British currency, the local currency closed at N2,153.90/£1 while it closed at the rate of N1,791.06/€1, a N9.73 appreciation against N1,800.79/€1 against the Euro.

Naira

Naira Drops 0.04% to N1,659.69/$1 at Official FX Market, Dips at Parallel Market

Published

5 days ago

October 17, 2024

Iyanuoluwa Martins

The Naira fell to N1,659 per Dollar on Wednesday in the official foreign exchange market, the Nigerian Autonomous Foreign Exchange Market (NAFEX).

The local currency fell by 72 Kobo or 0.04 percent to close at N1,659.69/$1 compared with Tuesday’s closing rate of N1,658.97/$1.

The market continued to weigh the recent inflation rise after the National Bureau of Statistics (NBS) on Tuesday said Nigeria’s inflation rose to 32.70 percent in the month of September, the first time after moderating in July and August.

Analysts from the World Bank ranked Nigerian Naira as among the worst-performing currencies in sub-Sahara Africa in 2024, noting that the local currency has lost about 43 percent.

The World Bank, in its latest edition of Africa’s Pulse report, disclosed that the Naira is at the same level with the Ethiopian Birr, and South Sudanese Pound in terms of decline in the region.

The report disclosed that the continued increase in the demand for Dollars and limited Dollar inflow is responsible for Naira depreciation in the last months.

The daily supply of FX as measured by secondary data from FMDQ Securities Exchange Limited indicated that turnover slumped by $40.85 million or 18.7 percent to $177.01 million from $217.86 million.

The Naira weakened its value against the Pound Sterling in the official market by N64.28 to sell at N2,153.90/£1 compared with the preceding session’s N2,089.62/£1.

It followed the same route against the Euro as it depreciated N51.67 to quote the midweek session at N1,800.79/€1 versus the preceding rate of N1,749.12/€1.

In the Parallel market, the Naira weakened on the American currency as it closed at N1,693.32 to the US Dollar, a drop of N29.61 compared to N1,663.71/$1 it closed during the Wednesday trading session.

The Naira also dropped in its value against the British Pound Sterling in the official market by N38.17 to sell at N2,159.12/£1 compared with the preceding session’s N2,120.95/£1 and followed the same pattern against the Euro as it depreciated N31.51 to quote at N1,847.94/€1 versus the previous day’s rate of N1,816.43/€1.

The local currency also depreciated N7.07 to close at N1,204.66 per Canadian Dollar, compared to Tuesday’s N1,197.59 per CAD.