Forex

Kiwi Soars to One-Year High in Latest Snub to Central Bank Cuts

Published

8 years ago

August 11, 2016

New Zealand’s dollar surged to the highest since May 2015 after traders deemed the central bank’s decision to cut borrowing costs was insufficiently dovish amid the global ardor for yield spurred by unprecedented global monetary easing.

The kiwi climbed against all of its 16 major counterparts after the Reserve Bank of New Zealand cut its official rate to a record, aping the reaction of its Australian counterpart when officials there lowered borrowing costs earlier this month.

Some investors had been looking for a more aggressive easing signal from the central bank, which indicated it would cut rates at least once more to boost weak inflation. The U.S. dollar advanced against the euro after last week’s better-than-expected jobs data bolstered a view that the Federal Reserve is among few central banks in developed economies whose next policy move will be to tighten.

“The kiwi surged because some in the market were looking for a very aggressive easing from the RBNZ,” said Ned Rumpeltin, the European head of foreign exchange strategy at Toronto Dominion in London. “So, even as they cut rates by 25 basis points and delivered one of the clearest easing biases currently seen among major central banks, some walked away from today’s meeting disappointed.”

The RBNZ lowered its official cash rate by a quarter point to 2 percent and published bank-bill forecasts indicating just one more reduction was in the pipeline. All sixteen economists surveyed by Bloomberg had expected the RBNZ to reduce by a quarter point. The futures market indicated on Wednesday that traders were certain of a reduction and even saw 20 percent odds for a 50 basis-point drop.

The RBNZ and the Reserve Bank of Australia prefer weaker currencies to stoke inflation back into their respective target bands. Two rate reductions by the Australian central bank since May and six by its antipodean neighbor in the past 14 months haven’t weakened exchange rates as their benchmark borrowing costs remain well above those of their peers, attracting foreign investment.

The kiwi climbed 0.6 percent to 72.49 U.S. cents as of 7:44 a.m. in New York, having jumped as much as 1.9 percent to 73.41 — the highest since May 2015 — after the RBNZ announcement. The Australian dollar rose 0.1 percent to 77.14 cents and is at levels not seen since before the May rate reduction.

“Australia and New Zealand yields remain attractive in a low-rate world,” said Jason Wong, a currency strategist at Bank of New Zealand in Wellington. “There’d still be upward pressure on the currencies even with rate cuts and that has been an ongoing theme since the start of the current-easing cycle. The U.S. outlook and in particular the prospect of Fed policy-tightening remains the key for the two currencies.”

After saying in his policy statement that a decline in the kiwi dollar “is needed,” Wheeler conceded in a news conference in Wellington that the RBNZ had “very limited influence” over the exchange rate. He also said he hadn’t given serious consideration to a half-point reduction because it wasn’t warranted and, in a “normal” situation, the RBNZ would probably be raising rates to cool the rampant housing market.

Australian 10-year bonds offer a 34 basis points yield spread over their U.S. equivalent, up from a low of 26 basis points Aug. 2. New Zealand 10-year bonds yielded 60 basis points more than similar American notes.

“Markets remain in strong yield-seeking mode,” said Robert Rennie, Westpac Banking Corp.’s global head of foreign-exchange and commodity strategy. “Both the Australian dollar and the New Zealand dollar appear well-supported for now.”

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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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Forex

BDC Operators in Abuja Face EFCC Crackdown: Chaos Erupts in Wuse Zone 4

Published

2 days ago

April 30, 2024

Samed Olukoya

The bustling streets of Wuse Zone 4 in Abuja transformed into a scene of chaos and apprehension as the Economic and Financial Crimes Commission (EFCC) conducted a surprise crackdown on Bureau De Change (BDC) operators.

The operation, which unfolded on Monday, sent shockwaves through the financial district, leaving traders and residents bewildered.

Eyewitnesses recounted scenes of pandemonium as EFCC agents descended upon the area, swiftly apprehending an undisclosed number of BDC operators.

The raid, which occurred around noon, disrupted normal trading activities and prompted fear among the local populace.

Speaking on condition of anonymity, BDC operators confirmed the raid, expressing dismay at the sudden turn of events.

“EFCC just raided the market, arresting many operators. They arrested some persons seen on the street and even pursued some persons to their offices. We are still looking for N30,000 or N50,000 to bail those arrested on Friday yet they came again today,” one trader lamented.

The crackdown comes as part of the EFCC’s concerted efforts to combat illicit financial activities and restore stability to the foreign exchange market.

Last Friday, the anti-graft agency announced the arrest of 34 suspected currency speculators for alleged involvement in foreign exchange fraud, signaling a firm stance against financial malpractice.

However, the EFCC’s actions have stirred controversy, with some questioning the efficacy of such raids in addressing underlying issues affecting the Nigerian currency.

Despite these efforts, the naira opened the week on a negative trajectory against the United States dollar, signaling potential challenges ahead.

At the official market on Monday, the naira witnessed a significant depreciation, trading at N1,419 against the dollar, representing a loss of N58 or 4.3% from the previous trading session.

The decline underscores the persistent demand for the greenback amid economic uncertainties.

Currency traders at the Zone 4 market reported heightened volatility, with the dollar trading at N1,340 per dollar, marking a notable increase from the weekend rate.

Amidst the turmoil, traders like Abubakar Taura navigated the fluctuating market, capitalizing on the volatility to secure profits.

Naira

Dollar to Naira Black Market Today, April 30th, 2024

As of April 30th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,340 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

2 days ago

April 30, 2024

Samed Olukoya

As of April 30th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,340 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: N1,340
Selling Rate: N1,330

Forex

ABCON President Announces Blueprint for Unified Retail Forex Market

Published

3 days ago

April 29, 2024

Samed Olukoya

Naira Dollar Exchange Rate - Investors King

The President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, has revealed plans to establish a unified retail end forex market structure.

This strategic initiative seeks to address volatility and streamline operations across the Bureaux De Change (BDC) sub-sector.

Gwadabe outlined the objectives of ABCON’s blueprint and the need to integrate operators from various segments of the market.

Central to the plan is the inauguration of state chapters to facilitate coordination, integration, and administration of a united market structure.

ABCON intends to extend its automation policies and platforms to all BDC operators nationwide, upgrading its Business Process Platform to enhance efficiency and transparency.

The proposed unified retail end forex market will feature a centralized, democratized, and liberalized online real-time trading platform.

This innovation aims to provide market participants with greater accessibility and transparency while fostering regulatory compliance and government oversight.

Speaking on the vision for the unified market, Gwadabe highlighted the importance of collaboration with regulatory agencies, security operatives, and government bodies to ensure a secure and thriving forex market environment.

Gwadabe reiterated the benefits of a realistic and vibrant retail forex market, aligning with the Central Bank of Nigeria’s (CBN) objectives of achieving true price discovery for the naira and balancing international obligations.

Also, the unified market structure aims to provide market intelligence reports, enhance the image of BDCs, and stimulate employment generation.

Furthermore, ABCON’s initiative aims to combat the proliferation of unlicensed forex platforms by creating a transparent and competitive market environment. By digitizing retail forex transactions and ensuring regulatory compliance, the association aims to capture revenues for the government and curb illicit financial activities.

ABCON, as a self-regulatory body representing all CBN-licensed BDCs, acknowledges the importance of maintaining integrity and adherence to regulatory standards within the sector.