Forex

Emerging Currencies Are in the Bull’s-Eye as More Central Banks Signal Hikes

Published

7 years ago

July 7, 2017

Emerging Currencies Are in the Bull’s-Eye as More Central Banks Signal Hikes

With yields surging across major economies as more central banks hint at joining the Federal Reserve in tightening policy, strategists are pointing to a likely loser: emerging-market currencies.

The fallout is already being felt in the foreign-exchange market as investors eye the end of an era of unprecedented stimulus. An MSCI index of emerging-market currencies hovered near a seven-week low Thursday as yields on Treasuries and bunds rose to fresh highs. In 2006, the last time investors braced for steeper borrowing costs in the biggest economies, the index lost almost 5 percent of its value in a span of weeks, while developing-market stocks plunged.

For emerging-nation currencies, the threat is that higher yields in major economies will sap demand for riskier developing markets. The pain may not be over. Chart-watchers also see signs that losses will deepen, with the MSCI currency index breaking below a key moving average.

“This is an inflection point,” said Win Thin, head of emerging-market currency strategy at Brown Brothers Harriman & Co. in New York. “The whole risk-to-reward for investing in EM has changed.”

Analysts aren’t necessarily in agreement in seeing the ingredients of a full-on rout in emerging currencies. At Goldman Sachs Group Inc., strategists don’t foresee the kind of rapid rise in yields that they say typically precipitates an emerging-market tumble.

But Brown Brothers’ Thin sees cause for concern. Among developing-market investments, the Turkish lira and South African rand are most vulnerable to a diminished yield advantage, in part because of the countries’ strained economic and political backdrops, he said.

The lira touched 3.6398 per dollar Thursday, the weakest since mid-May. It’s down 2.9 percent in July, while the rand has depreciated 2.8 percent, to 13.45. Thin predicts the lira will weaken to 3.8 by mid-2018, and the rand to 14.

“Emerging-market currencies face the greatest risk of downside in Q3 in our scenario, whether from a growth slowdown and a backup in global risk spreads, from a more hawkish Fed, or both,” John Hardy, head of foreign-exchange strategy at Saxo Bank A/S, wrote in a report published Wednesday.

Chartists’ Alarm

Technical indicators also point to further losses. MSCI’s emerging-market currency index broke below its 55-day moving average this week, approaching support at the 100-day average Thursday.

Two-year Treasury yields reached 1.43 percent Thursday, the highest since 2008, as traders anticipated more rate hikes this year after the minutes from the Fed’s June meeting showed policy makers still intent on tightening. The Bloomberg dollar index is up about 0.4 percent in July, after a four-month slide.

Meanwhile, speculation that the European Central Bank will taper its bond buying in 2017 sent two-year bund yields to the highest in a year last month. Investors are also adjusting to hawkish shifts from the Bank of Canada and the Bank of England.

For strategists at Goldman Sachs, the key is the speed of the move higher in developed-market yields. A speedy climb could threaten emerging nations in part by lifting the cost of dollar-based debt. The bank’s projections are for yields to rise only slowly. They see the 10-year German yield reaching 0.7 percent by year-end, from about 0.56 percent now.

This time around, there’s also less dependence on external financing, combined with overall higher domestic real rates, said Kamakshya Trivedi, co-head of global currency and EM strategy at Goldman Sachs.

That being said, there are some currencies with relatively lower rates that are vulnerable, such as Hungary, South Korea and Taiwan.

“We’d expect to see the real rate differential there compress as developed-market rates move higher, and that will be a negative for those currencies,” Trivedi said by phone.

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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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Naira

Dollar to Naira Black Market Exchange Rate Today 4th May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 4th, 2024 stood at 1 USD to ₦1,400.

Published

6 hours ago

May 4, 2024

Samed Olukoya

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 4th, 2024 stood at 1 USD to ₦1,400.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,380 and sold it at ₦1,370 on Friday, May 3rd, 2024.

This indicates a decline in the Naira exchange rate compared to the current rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

Buying Rate: ₦1,400
Selling Rate: ₦1,390

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

Naira

Black Market Dollar Rate Reaches ₦1,380 Today, May 3rd, 2024

US dollar to Nigerian Naira exchange rate as of May 3rd, 2024 at the black market stood at 1 USD to ₦1,380

Published

2 days ago

May 3, 2024

Samed Olukoya

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 3rd, 2024 stood at 1 USD to ₦1,380.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,350 and sold it at ₦1,340 on Thursday, May 2nd, 2024.

This indicates a decline in the Naira exchange rate compared to the current rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

Buying Rate: ₦1,380
Selling Rate: ₦1,370

Naira

Dollar to Naira Black Market Today, May 2nd, 2024

As of May 2nd, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,350 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

2 days ago

May 2, 2024

Samed Olukoya

As of May 2nd, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,350 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 N1,310 and sell it at N1,300 on Monday, April 29th, 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.