Forex

Aussie Dollar’s Rollercoaster Shows Dilemma Facing Central Banks

Published

7 years ago

July 21, 2017

Aussie Dollar’s Rollercoaster Shows Dilemma Facing Central Banks

Australia’s central bank whipsawed the nation’s currency this week, underscoring just how difficult policy makers are finding it to even discuss an end to ongoing stimulus.

Minutes of the Reserve Bank of Australia’s July meeting released Tuesday included a discussion of the level of the neutral interest rate, which was estimated at about 3.5 percent — a long way from the current 1.50 percent. Traders interpreted the discussion as a signal that rate hikes were on the way and sent the Australian dollar soaring, effectively tightening conditions in the economy.

Just three days later, the RBA’s No. 2 official used a speech to hammer home that policy makers were not signalling tighter policy. The Aussie promptly tumbled.

“Debelle has clearly taken the opportunity to hose down interest rate expectations for a rate rise and take some of the heat out of the currency,” Kristina Clifton, an economist at Commonwealth Bank of Australia, wrote in a note.

The big swings in the Aussie dollar are a vivid illustration of just how sensitive markets have become to any hint of a shift in central bank communication after years of ultra loose monetary policy. European Central Bank President Mario Draghi has struggled to contain expectations for any winding back of stimulus and the Bank of England has also whipsawed markets with mixed messages on whether or not it plans to tighten.

In the case of Australia, Debelle was emphatic in his message that traders had misread the central bank’s minutes by fueling the Aussie’s biggest one-day gain in four months. The currency and three-year bond yields reached the highest since 2015.

Instead, he said because Australia’s cash rate didn’t fall as low as those of global counterparts, the RBA doesn’t automatically have to follow suit now that peers have begun tightening.

A stronger currency is the last thing policy makers in Sydney want as they seek to boost the nation’s services and exports sectors in the wake of a cooling mining boom. The average value of the Australian dollar against a basket of other currencies, known as the trade-weighted index, has climbed about 6 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.

Debelle’s comments unwound most of the post-minute gains. Bonds were set to end the week little changed, while the Aussie was up 1 percent against the greenback and was heading for declines on the week versus six of the 10 major developed currencies.

The experience in Australia is a reminder of how sensitive markets are to central bank speak, said Chua Hak Bin, a Singapore-based senior economist with Maybank Kim Eng Research.

“Given exceptionally low current interest rates in most countries, any signals about potential policy tightening will lead to large currency swings,” he said.

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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

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

15 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

1 day 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.