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




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.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq,, Investorplace, and many more. He has over two decades of experience in global financial markets.

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CBN Resumes Forex Sales as Naira Hits N1,570/$ at Parallel Market



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The Central Bank of Nigeria (CBN) has resumed the sale of foreign exchange to eligible Bureau De Change (BDC) operators.

The decision was after Naira dipped to N1,570 per dollar in the parallel market,

CBN announced that it would sell dollars to BDCs at a rate of N1,450 per dollar. This decision aims to address distortions in the retail end of the forex market and support the demand for invisible transactions.

Following the CBN’s intervention, the dollar, which recently traded as low as 1,640 per dollar, has shown signs of stabilization.

The apex bank’s action is expected to inject liquidity and restore confidence among market participants.

BDC operators have welcomed the move. Mohammed Magaji, an operator in Abuja, noted that the dollar was selling at 1,630 per dollar.

He emphasized the market’s volatile nature but expressed optimism about the CBN’s intervention.

Aminu Gwadebe, President of the Association of Bureau de Change Operators of Nigeria, attributed the naira’s decline to acute shortages, speculative activities, and increased demand due to recent duty waivers.

He praised the CBN’s action as a necessary step to alleviate market pressures.

The CBN’s efforts include selling $20,000 to each eligible BDC, with a directive to limit profit margins to 1.5% above the purchase rate.

This strategy aims to ensure that end-users receive fair rates and to curb inflationary pressures.

The CBN’s ongoing reforms seek to achieve a market-determined exchange rate for the naira. As the naira continues to navigate turbulent waters, stakeholders remain hopeful that these measures will lead to a more stable and liquid forex market.

Market analysts suggest that sustained interventions and increased access to foreign exchange could help reverse the naira’s downward trend.

The CBN’s actions demonstrate a commitment to tackling the challenges facing the foreign exchange market and supporting Nigeria’s economic stability.

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Nigeria’s FX Inflows Leap 57% as CBN Steers Economic Confidence



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Nigeria’s foreign exchange (FX) inflows have surged by 57% over the past year, signaling newfound stability for the Naira.

Analysts attribute this growth to the Central Bank of Nigeria’s (CBN) consistent policies, which have bolstered investor confidence and enhanced market stability in Africa’s most populous nation.

Data from the CBN reveals that FX inflows rose to $8.86 billion in February 2024, compared to $5.66 billion in February 2023.

This increase is a testament to the effectiveness of the CBN’s strategic measures. Similarly, foreign exchange turnover skyrocketed 180% year-on-year to $240.64 million in February 2024.

“The upsurge in FX inflows reflects the positive impacts of increased interest rates and the relative stability of the exchange rate,” said Ayokunle Olubunmi, head of financial institutions ratings at Agusto Consulting.

He noted that high interest rates in Nigeria are attracting investors seeking better returns compared to developed countries.

The CBN has actively engaged with foreign investors, addressing concerns and providing insights into monetary policy actions.

Olayemi Cardoso, the CBN governor, emphasized that investor confidence has been restored, partly due to the bank’s clearance of a $7 billion foreign exchange backlog.

New investments into Nigeria also increased significantly, reaching $1.24 billion in February 2024, compared to $0.33 billion in January 2024. This uptick is indicative of a more stable and attractive investment climate.

Analysts point out that improved oil production and higher global oil prices have significantly boosted FX earnings.

Also, government policies aimed at attracting foreign investment, along with strategic management of the exchange rate, have played pivotal roles in this economic revival.

The CBN’s efforts to diversify the economy and boost non-oil exports are starting to yield results.

Increased diaspora remittances, facilitated by better official channels and incentives, have further contributed to the rise in FX inflows.

While challenges remain, the positive trend in FX inflows suggests a more robust and stable economy, encouraging further investment.

Consistent and transparent economic policies are expected to enhance investor trust, stabilizing the Naira and fostering a more favorable exchange rate environment.

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Naira Hits Five-Month Low Amid Dollar Demand Surge



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Nigeria’s naira extended its losing streak to a fifth consecutive day as it slipped to its weakest level since March despite the Central Bank of Nigeria’s (CBN) interventions.

The naira closed at 1,577.29 per dollar on Monday, down from Friday’s N1,563.8 per dollar on FMDQ.

This decline comes despite the CBN’s efforts to stabilize the currency by injecting $122.7 million through dollar sales into the market.

However, analysts argue that these amounts were insufficient to balance the robust domestic demand for the greenback.

“The CBN has been in the market selling $50 million from time to time, which is not enough,” commented Carlo Morelli, senior portfolio manager at Azimut Investment SA.

Morelli attributes the persistent pressure on the naira to capital outflows and a lack of investor confidence in the currency, despite the central bank’s commendable efforts in tightening monetary policy and reducing naira liquidity.

Central Bank Governor Olayemi Cardoso has aggressively raised interest rates in an attempt to curb inflation and stabilize the naira.

The benchmark borrowing rate now stands at 26.25%, following an increase of 14.75 percentage points since May 2022.

However, the currency has weakened by approximately 70% against the dollar since exchange-rate controls were eased last year.

“Restoring foreign exchange broad confidence is the last step, and the huge volatility in May delayed the return to normalcy,” Morelli added.

“Many foreign investors are still waiting for more evidence of stability before considering Nigeria investable.”

The naira’s decline makes it the second-worst performing currency tracked by Bloomberg in 2024, trailing only the Lebanese pound.

The recent depreciation has been fueled by both seasonal dollar demand and ongoing investor skepticism.

The central bank’s next policy decision, set for July 23, is expected to address these issues. Monday’s data showing annual inflation quickened to 34.2% in June suggests that another rate hike might be on the horizon.

In a bid to bolster the naira, the central bank has increased Nigeria’s foreign exchange reserves to $35 billion as of July 8, the highest level since May 30, 2023.

This boost is attributed to recent loans from the World Bank and the African Export-Import Bank.

Omobola Adu, an analyst at BancTrust & Co. Investment Bank, noted that recent pressure on the naira has also stemmed from corporates and individuals preparing for foreign vacations.

“Boosting the supply of FX into the country remains crucial for the government to alleviate pressure on the naira,” Adu stated.

He suggested that a eurobond or local dollar bond sale later this year, along with increased support from multilateral institutions, could help shore up reserves.

Despite these challenges, Central Bank Governor Cardoso remains optimistic, asserting that the worst of the currency’s volatility is over.

He reiterated this sentiment on Thursday in Lagos, addressing business leaders and highlighting improvements in crude output and capital inflows as positive signs.

Nigeria, Africa’s largest crude producer, relies heavily on oil sales, which account for at least 80% of its export earnings.

The country’s combined crude oil and condensate output rose to 1.5 million barrels per day in June, the highest since February, according to the upstream petroleum regulatory commission.

“While the naira may be undervalued, for the naira to stabilize and perhaps regain ground, large portfolio and capital inflows are needed,” said Samir Gadio, head of Africa strategy at Standard Chartered Plc in London.

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