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Dollar Slips Across Board on Monday on Rising COVID-19 Cases

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Global debt

Dollar Trades Lower as Concern Over Second Wave of COVID-19 Deepens

The United States dollar slipped on Monday as investors remained concerned over the rising number of COVID-19 confirmed cases in the US and the rest of the world.

The world’s largest economy that recently announced additional stimulus to further boost economic recovery and support small businesses reported more than 30,000 new cases on Friday and Saturday, making it the highest daily totals since May 1, according to data compiled by Johns Hopkins University.

“We expect the FX markets to remain caught between recovering economic indicators and concerns about a second-wave of COVID-19 infections in the week ahead,” analysts at Barclays stated on Monday

Sameer Goel, a chief macro strategist at Deutsche Bank,  Asia, said the big question for investors right now on US dollar is the greenback should be trading at a safe-haven risk premium as concerns rise over a potential second wave of virus infections.

During the Asian trading session, the US dollar index stood at 97.503 against a basket of currencies, down from 96.5 it traded earlier in the month.

Against the British Pound, the US dollar pulled back slightly after plunging for the last 8 days as shown below.

GBPUSDDaily

Tope Pete, a currency trader, who spoke with our correspondent on GBPUSD pair, said “1.2175 is an area of interest on the daily chart for the cable. It is an area that lies around the 38.2 percent fibo level of 2019 high (1.3513 of Dec 13, 2019) and 2020 low (1.1640 of Mar 2020).

“As can be seen on this daily chart, a bearish candle pattern for a reversal in an uptrend market was completed on June 11, 2020, right beneath the 61.8 percent fibo region of the aforementioned high and low area. An entry at the end of the candle pattern formation would have given a sell entry at the opening of June 12, 2020 candle with Targets at the 50 percent area (1.2465) and 38.2 percent area (1.2210).

“However, for those who couldn’t get in at the aforementioned entry, a further selloff is been anticipated while entries will only be confirmed with a strong bearish candle reversal pattern along the 50 percent region where it currently is.

“A strong bullish run above the 1.2720 area totally invalidates this setup.

“As the UK government looks to ease down on the COVID-19 guidelines on social distancing, more business will open up for transaction and this could help the UK economy make a good spring.”

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.

Forex

Naira Declines Slightly on the Black Market to N474/$

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ATM at lagos

Naira Drops Marginally on the Black Market to N474 Against US Dollar

Nigerian Naira declined marginally on Tuesday on the parallel market, popularly known as the black market.

The local currency declined by N1 to N474 per US dollar, down from the N473 it traded on Monday.

This was coming after Shoprite announced it would be exiting Nigeria, Africa’s largest economy. The announcement further damped the nation’s economic outlook amid the already heighten economic uncertainties.

Nigeria continues to struggle with low dollar availability after low oil prices and weak global demand for the commodity eroded the nation’s foreign revenue generation.

On the Investors and Exporters Forex window, the Naira remained pressured at N389 to a US dollar, better than the N389.25 it exchanged on Monday but more than the N381 stipulated by the Central Bank of Nigeria.

Total turnover traded by investors rose from $18.83 million traded on Monday to $24.66 million on Tuesday.

Experts have said the series of bad news emanating from the country will continue to deter potential investors and hurt capital importation necessary to boost dollar liquidity.

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Business

Forex Scarcity Weighs on Manufacturing Sector

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Steel Manufacture At Evraz Plc West-Siberian Metallurgical Plant

Manufacturing Sector Suffers from Lack of Dollar Liquidity

The  Director-General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, has said lack of dollar availability continues to weigh on the manufacturing sector in the first half of the year as the sector recorded its third consecutive month of contraction in the month of July.

According to Yusuf, several manufacturers had to source for forex on the black market, increasing scarcity on the already stressed section of the forex even more. This, other experts have blamed for the high Dollar-Naira exchange rate on the black market.

On Monday, the Naira was exchanged at N473 to a US dollar on the parallel market popularly known as the black market. The local currency gained N2 from the N475 it was exchanged before the Sallah holiday to N473 on Monday when the market opened.

“Across, practically, all sectors, we are experiencing cost escalation, loss of credit lines enjoyed from foreign creditors, forex remittance challenges and many more.  We need an urgent response from the CBN to calm the situation and restore confidence in our foreign exchange management framework,” Yusuf stated.

The Lagos Chamber of Commerce and Industry said most of its 2,000 members have been hit by the dollar shortage and wide foreign exchange rate that is presently eroding their profits.

“If the situation persists, it will lead to lay-offs. If you are not producing, there will be a shortage of goods in the market, prices will go up,” he added

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Forex

Naira Gains N2 Against US Dollar to N473 on Black Market

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Naira Dollar Exchange Rate

Naira Gains Against Dollar to N473 on Black Market

The Naira gained slightly on the parallel market, popularly known as the black market, on Monday to exchange at N473 per US dollar.

The local currency traded at N475 to a US dollar on Friday before gaining N2 to N473 on Monday.

This is coming on the back of dollar scarcity caused by falling foreign reserves and low oil prices.

Against the British Pound the local currency declined by N5 from N585 it traded on Friday to N590 on Monday.

This continues against the Euro single currency as the Naira depreciated by N2 to N542, down from N540 it traded on Friday.

On the Importers & Exporters Forex window, the Nigerian Naira exchanged at N389.25 against the United States dollar, slightly below the N388.33 it opened on Monday.

Investors traded $18.83 million during the trading hours of Monday on the I&E FX window.

The Central Bank of Nigeria’s exchange rate remains N381 to a United States dollar.

The apex bank had adjusted the local currency foreign exchange rate twice in the last few months to ease the pressure on the nation’s dwindling foreign reserves.

Still, the inability of the apex bank to improve the supply of the US dollar into the economy continues to weigh on the Naira value and general economic activities.

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