Forex

Aussie Dollar Gives Reserve Bank a Rate Hike It Doesn’t Want

Published

7 years ago

July 20, 2017

Aussie Dollar Gives Reserve Bank a Rate Hike It Doesn’t Want

Aussie firms fretting over talk of interest-rate hikes could be feeling like they’ve just had one — thanks to a spiraling currency.

The average value of the Australian dollar against a basket of other currencies, known as the trade-weighted index, has climbed 6.5 percent since the start of June. It takes just a 5 percent increase to inflict the same economic impact as a quarter-point hike in the Reserve Bank of Australia’s cash rate, according to Paul Bloxham, chief economist for Australia at HSBC Holdings Plc, who previously worked at the central bank.

The comparison suggests the Aussie’s ascent could start to hamper the nation’s economic transition. Since last year, the RBA has repeated a refrain that the currency’s slump since 2013 has helped industries outside mining; but that an appreciation “could” or “would” complicate an adjustment toward services and manufacturing. The two main levers for tightening and loosening conditions in the Australian economy are interest rates and the floating exchange rate.

“The RBA would certainly prefer a lower currency due to its positive impact on GDP and the economically beneficial realignment of investment and activity that it should deliver,” said Sean Keane, an Auckland-based analyst at Triple T Consulting. “What the higher currency will do, however, is take away some of the additional stimulus that the RBA and Australian Treasury may have been factoring in towards the end of this year and into next.”

Since the RBA first warned on the Aussie `complication’ last April, the currency has generally held in a range of 73 U.S. cents and 77 U.S. cents. With a spike in commodity prices last year, policy makers appeared fairly relaxed about the currency’s level — while they would have liked it lower, they could live with it. But with the Aussie now near 80 U.S. cents, it’s moving into new territory.

Ironically, the RBA gave the currency’s comeback a helping hand Tuesday by detailing a board discussion in the minutes of this month’s policy meeting. It estimated the level of the neutral cash rate — where output growth is at potential and inflation stable — at 3.5 percent, or two percentage points above the current record-low cash rate. Traders appeared to extrapolate that if policy makers are discussing that, then they must be discussing rate increases.

Some economists including Commonwealth Bank of Australia’s Gareth Aird said they didn’t interpret the minutes’ discussion as a signal of imminent hikes, with most expecting the RBA to stay on hold for the rest of this year. Markets predict a 60 percent chance of a hike in the first half of 2018.

The real test for rate increases is whether the RBA’s forecasts for the economy — growth accelerating to 3 percent and inflation meeting its 2 percent to 3 percent target — are likely to come to pass. Thursday’s jobs report, a speech from RBA Deputy Governor Guy Debelle on Friday and second-quarter inflation data next Wednesday are lining up as trigger points.

Up Next

Dollar Weakens on U.S. Politics; Equities Falter

Don't Miss

CBN’s Forex Market Intervention Improving Business Climate —Adenuga

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.

Comments

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

12 hours 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

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

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

22 hours 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.

Black Market Dollar to Naira Exchange Rate

Buying Rate: N1,350
Selling Rate: N1,340

Forex

Yen’s Plunge Persists Despite Japan’s Late New York Trading Intervention

Published

1 day ago

May 2, 2024

Samed Olukoya

Japan’s attempts to shore up the yen faced yet another setback as the currency continued its downward spiral despite a late intervention in New York trading.

Despite efforts by Japanese authorities to stem the yen’s decline, traders remained unfazed, indicating a growing skepticism towards the efficacy of such measures.

The yen, which had initially weakened as much as 1.1% against the dollar during Asia trading, stubbornly clung to its downward trajectory, inching closer to levels seen before the suspected intervention.

Speculations ran rife among traders regarding Japan’s involvement in the currency market after witnessing abrupt fluctuations in the yen’s value during the final stretch of the US trading session.

This recent development underscores a deepening challenge for Japanese policymakers grappling with the yen’s persistent depreciation.

Despite their best efforts, the market sentiment appears to be increasingly immune to intervention tactics, casting doubts on the effectiveness of such measures in the long run.

Shoki Omori, chief desk strategist at Mizuho Securities Co., weighed in on the situation, remarking, “Japan’s finance ministry likely intervened but couldn’t break 152, where investors used to be cautious.”

He further noted, “Now that authorities are seen as having stepped in for a second time but gave the impression that they cannot stop the yen cheapening trend alone, market participants will likely feel more comfortable to short yen.”

The prevailing sentiment among traders suggests a growing consensus that Japan’s interventions may be insufficient to halt the yen’s depreciation trend.

Despite the authorities’ concerted efforts, the currency’s plunge persists, signaling a broader challenge for policymakers in navigating the complexities of the global currency market.

As the yen’s decline continues unabated, market participants remain on high alert, bracing for further volatility in the days ahead.

The inability of intervention measures to reverse the currency’s downward trajectory raises questions about the effectiveness of traditional policy tools in an increasingly interconnected and unpredictable financial landscape.

In the face of mounting challenges, Japanese authorities may find themselves compelled to explore alternative strategies to address the yen’s persistent weakness.

Whether through unconventional policy measures or coordinated efforts with global counterparts, finding a sustainable solution to stabilize the yen remains a pressing priority for policymakers amid evolving market dynamics.