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Aussie and kiwi Go From Worst to Best

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New Zealand dollar

The Australian and New Zealand dollars have gone from the worst to best performers among major developed peers as some traders reassessed their outlooks on monetary policy.

The Aussie and kiwi are the top two gainers this quarter, rebounding from losses during the first nine months of the year. Reserve Bank of New Zealand Governor Graeme Wheeler delivered the policy easing that economists had predicted this month, while signaling interest rates will stay on hold. Reserve Bank of Australia Governor Glenn Stevens refrained from cutting rates for a seventh month.

“The recent out-performance in the Australian dollar in particular has been driven by some reassessment of the pace of easing from the RBA with pricing shifting from a near certain cut in 2015, to little chance of a cut for some time,” said Daniel Been, a Sydney-based currency strategist at Australia & New Zealand Banking Group Ltd. Kiwi bears were also disappointed by Wheeler, he said.

Australia’s dollar rose 0.2 percent to 72.66 U.S. cents as of 1:06 p.m. in Tokyo, set for a 3.5 percent advance for the quarter. The New Zealand dollar climbed 0.4 percent to 68.71 U.S. cents, poised for a 7.4 percent jump since Sept. 30.

Quarterly Rally

The Aussie and kiwi had tumbled 14 percent and 18 percent, respectively, during the first nine months of this year amid a slump in commodity prices and concerns over a slowing Chinese economy. The New Zealand dollar is now being supported by year-end currency demand domestic dairy companies and hedging interest to adjust for the greenback’s strength this year, Been said.

The latest rebound may be short lived. Australia’s dollar will slip 5 percent to 69 U.S. cents at the end of next year, while New Zealand’s currency will decline 8 percent to 63 cents, according to the median forecast in a Bloomberg survey.

“Key swingers are still China’s growth prospects and commodities, though much of the commodity slump has been in the price of the Australian dollar,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “For the New Zealand dollar, the growth outlook is expected to moderate further.”

Bloomberg

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market.

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Naira Declines Against Pound, Euro After Devaluation

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Naira Declines against pound

Naira Plunges Against Euro and Pound After CBN Adjusts Official Exchange Rate

Following the devaluation of the Naira by the Central Bank of Nigeria, the local currency declined against the British Pound and the Euro single currency on the black market.

The Naira lost N4 against the British pound to trade at N562 from the N558 it traded on Wednesday.

This decline continues against European common currency as the Naira lost N1 from N504 exchanged on Wednesday to trade at N505 on Thursday.

On the Investors and Exporters (I&E) Forex window, the Naira lost 0.06 percent or 25 kobo against the US dollar to trade at N386.75 after plunging to as low as N390 during the trading hours.

Activity on the I&E window declined by 86.4 percent from $103.37 million traded previously to $11.96 million as traded are reportedly stay off the market.

The FMDQ Group, who manages the I&E Fx window, on Wednesday adjusted its CBN’s Naira-USD official exchange rate from N361 on Tuesday to N381 despite the central bank maintaining N360/$ on its official website. Indicating that the apex back has officially implemented the N380 but without an official announcement, likely due to backlash — especially after the CBN has repeatedly said the nations have enough reserves to support the economy and blamed speculators and hoarders for the wide exchange of the local currency.

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Naira Slides to N463 Against US Dollar on Black Market

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Naira

Naira Falls Against Dollar, Trades at N463 on Black Market

The Nigerian Naira declined against the United States dollar on the black market following the decision of the Central Bank of Nigeria (CBN) to adjust the nation’s official foreign exchange rate.

The local currency depreciated by N2 against the US dollar from the N461 it exchanged on Wednesday to N463 on Thursday after the news of CBN adjustment became known.

The apex bank had adjusted the official foreign exchange rate from the N360 previously used for the US dollar to N380 due to the recent changes in macro fundamentals of the nation.

This is the Naira lowest exchange rate on the black market in almost three years and highlighted the nation’s precarious position especially when the escalating inflation rate of 12.4 percent is factored in.

On Tuesday, United Capital Plc said given current economic situation that the official exchange of the Naira is expected to slide to N430 to a US dollar by the end of the year.

The pan-African investment banking and financial services group said “On the exchange rate, we believe the odds are in favour of a further naira adjustment, which may take the official rate to N410/$ to N430/$ by year-end.

“However, we believe the Central Bank of Nigeria will continue to defend the value of the local unit for as long as it can.”

It went on to predict that the economy will shrink by 2.69 percent in 2020, down from the 2.3 percent growth predicted earlier in the year.

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Naira-USD Exchange Rate to Hit N430 – Report

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Naira Foreign Exchange Rate to US Dollar to Decline to N430 in 2020

United Capital Plc, a pan-African investment banking and financial services group, on Tuesday said the nation’s official foreign exchange rate may decline to N430 in 2020.

This was after the Central Bank of Nigeria adjusted the Naira exchange rate to a US dollar from N360 to N380 to better accommodate the changes in macroeconomic fundamentals in recent months.

In the company’s economic projection for the second half of the year, titled ‘Nigeria H2 2020 outlook report: Up in the air,’ it said “On the exchange rate, we believe the odds are in favour of a further naira adjustment, which may take the official rate to N410/$ to N430/$ by year-end.

“However, we believe the Central Bank of Nigeria will continue to defend the value of the local unit for as long as it can.”

The report stated that the nation’s growth rate slowed to 1.87 percent in the first quarter of the year, partially reflecting the impacts of COVID-19.

It explained that despite the series of stimulus pumped into the economy by the Federal Government, the second quarter Gross Domestic Product (GDP) is expected to contract given the vast impact of COVID-19 on businesses and households.

It added, “However, the palliatives and reforms that are being announced may reduce the probability of sliding into a deep recession or quicken recovery once the incidence rate of the pandemic begins to drop and the economy is fully re-opened.

“Overall, the Nigerian economy may enter a technical recession by Q3 2020 (after two consecutive quarters of contraction in Q2 and Q3 2020), with a chance of early recovery by Q4 2020 or Q1 2021.”

The company, therefore, lowered its 2020 real GDP growth projection from 2.3 percent to -2.69 percent.

“The biggest downside risk to the above projections remains the possibility of a second round of lockdown, especially if the virus continues to spread rapidly,” it added.

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