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Dollar Rises on U.S. Rate Speculation

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Bureau Of Engraving And Printing Prints New Anti-Counterfeit 100 Dollar Bills
  • Dollar Rises on U.S. Rate Speculation

The dollar climbed for a seventh day against the yen and held near a two-week high versus its major peers as economic data and comments from Federal Reserve officials revived speculation about an interest-rate increase in 2016.

The U.S. currency posted its longest winning streak versus its Japanese counterpart since March. Key jobs numbers at the end of this week are forecast to show a pickup in hiring in the world’s largest economy, while Fed Bank of Chicago President Charles Evans told reporters in Auckland today that one rate increase by year-end is likely if data continue to improve.

An index of the U.S. currency jumped the most since mid-September on Tuesday after fellow official Jeffrey Lacker urged the central bank to tighten policy to stem a likely uptick in inflation.

“The dollar remains supported by expectations of a Fed rate hike,” said Viraj Patel, a London-based foreign-exchange strategist at ING Groep NV. “Fed talk has been relentlessly hawkish in the past couple of weeks, so much so it’s been hard for markets to ignore. Markets are now looking for the data to validate this.”

The yen slipped 0.2 percent to 103.12 per dollar as of 6:40 a.m. New York time in its seventh day of losses, while the euro rose 0.2 percent to $1.1224.

The Bloomberg Dollar Spot Index, which measures the currency against 10 major peers, was little changed as of 10:35 a.m. in London, a day after it climbed 0.6 percent to the highest on a closing basis since Sept. 20.

‘Compelling’ Case

Evans, who’s not a voting member on the Federal Open Market Committee until next year, said the U.S. central bank may raise the benchmark interest rate as soon as next month. Fed Bank of Cleveland President Loretta Mester said Monday that the case for an increase is “compelling.”

Traders will get more clues on the likely path of U.S. rates later in the day when reports on employment, manufacturing and services are released. The probability of a hike by December rose to 61 percent, from 51 percent at the start of last week.

“Those who had become doubtful of a rate increase this year are now paring their bearish view somewhat,” said Takao Hattori, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo.

“It seems clear the Fed wants to lift rates before the end of this year.”

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 experience in the global financial markets.

Forex

Naira Declines to N465 Against US Dollar on Black Market

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Naira Dollar Exchange Rate

Naira Falls to N465 Against US Dollar on Black Market

Nigeria’s economic uncertainties continued to weigh on the Nigerian Naira despite the Central Bank of Nigeria’s forex sale resumption.

The local currency declined by N3 from N462 a US dollar to N465 on the black market even with over $58 million injected into the forex market through the bureau de change.

Against the British Pound, Naira depreciated by N5 from N595 to N600 on Friday while it dipped by N3 against the European common currency to N548, down from N545 it traded on Thursday.

A series of weak economic fundamentals and anti-people policy continued to hurt the nation’s economic outlook and investors’ confidence.

In a recent event, the Nigerian government simultaneously raised electricity tariffs, pump prices and foreign exchange rates in an economy that depends on imports for most of its supplies.

Also, with the unemployment rate at over 27 percent, inflation rate over 13 percent and the number of companies shutting downing operation rising on a daily bases, foreign investors and even local investors are now holding back on investments needed to support the nation’s weak foreign reserves and cushion the negative effect of COVID-19.

While the exchange rates have moderated slightly from COVID-19 peak, it remains close to COVID-19 record.

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Zenith Bank Joins Other Banks to Cap International Spend Limit at $100/Month

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Zenith Bank

Zenith Bank Caps International Spend Limit at $100 Per Month

Following persistent forex scarcity impacting the nation, Zenith Bank has joined other deposit money banks capping international spend limits.

In an e-mail to customers, the lender said “Please be informed that the monthly international spend limit for your Zenith Bank Naira Card has been reviewed to US$100 while the use of Zenith Bank Naira cards for international Automated Teller Machine cash withdrawals is still temporarily suspended.’

It added that this review is in response to change in Nigeria’s macroeconomic factors.

The bank, however, advised those with higher international spend requirements than the US$100 stipulated above to visit any Zenith branch and request a foreign currency debit or prepaid card “which are available in US Dollar, Pounds and Euro variants.”

This is coming a few weeks after UBA, GTBank, First Bank and others capped their international spend limits to $100 for similar reasons. However, Zenith’s decision was after the Central Bank of Nigeria commenced forex sale to the Bureau De Change Operators across the country.

 

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Nigeria’s Foreign Exchange Inflows Decline by 43.2% in May

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CBN Says Foreign Exchange Inflows Decline to $5.52bn in May

The total foreign exchange inflows into Nigeria in the month of May declined by 43.2 percent, according to the Central Bank of Nigeria’s report.

The report said the COVID-19 pandemic negatively impacted capital inflows during the month as the total foreign exchange inflows dropped to $5.52 billion.

It said “Inflows through the CBN and autonomous sources were negatively impacted.

“On a month-on-month basis, foreign exchange flows into the economy declined to $5.52bn in May 2020.

“The decline in inflow, relative to the level in April 2020, was attributed to the lower receipts from oil sources, which fell sharply by 55.2 per cent because of the continued fragility in global crude oil demand.

“Inflow through autonomous sources, particularly invisible purchases, declined by 7.0 per cent to $3.51bn, relative to the preceding month, while there was a 66.2 per cent fall in inflow through the CBN, which stood at $2.01bn in May 2020.”

However, foreign exchange outflows from the country declined by 23.9 percent to $2.50 billion in the month. Likely because of forex scarcity and the central bank forex rate adjustments that curbed outflows by foreign investors.

A break down of the report showed that outflow through the apex bank declined by 30.9 percent to $2.19 billion, below what was recorded in April.

But outflow through autonomous sources, mainly imports and Invisibles, rose by 152.2 percent to $0.32 billion. Higher than the amount reported for the month of April.

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