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Dollar Stable Following Weak U.S. Job Numbers

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  • Dollar Stable Following Weak U.S. Job Numbers

The U.S. dollar remained fairly steady against counterparts during Asian trading session on Monday despite the weak non-farm payrolls report released on Friday.

The dollar .DXY, which measures the greenback against a basket of six other major currencies, was about 0.1 percent higher at 95.261, well off a four-week low of 94.084 hit on July 26.

Investor focus has shifted to the yuan after the People’s Bank of China on Friday made it more expensive to bet against the currency, which helped it rebound from a 15-month low against the greenback.

U.S. job growth slowed more than expected in July, but a drop in the unemployment rate suggested that the labor market conditions were tightening.

“We’re seeing pretty consistent dollar strength across the board. The theme is there,” said Bart Wakabayashi, Tokyo branch manager at State Street Bank.

“Although Friday maybe didn’t hit the target when it comes to the non-farm payrolls, it was still a positive number. It’s a good and strong number. If you line that up with previous releases, you see a trend,” he said.

The Fed kept rates unchanged as widely expected last Wednesday, and gave an upbeat assessment of the world’s biggest economy.

The euro hit a 4-1/2-week low against the dollar on Monday.

The single currency traded at $1.15625 after touching as low as $1.1557, its lowest level since changing hands at $1.15275 on June 28.

The offshore yuan was nearly flat, trading at 6.846 yuan per dollar CNH=D3.

The yuan pulled from a 15-month low against the greenback on Friday after China’s central bank said it would require banks to keep reserves equivalent to 20 percent of their clients’ foreign exchange forwards positions from Monday.

The yen was barely changed against the dollar at 111.25 yen JPY= on Monday.

The yen had moved about 0.4 percent higher on Friday on worries about Sino-U.S. trade tensions after China proposed retaliatory tariffs on $60 billion worth of U.S. goods such as liquefied natural gas and aircraft.

But State Street Bank’s Wakabayashi said the negative impact on markets from the trade tariff exchanges between the Washington and Beijing is not as acute it had been previously.

“Whenever there is an imbalance in the market in terms of uncertainty, the initial flight to safety is probably to the dollar, which is the preferred currency right now,” said Wakabayashi.

“We could extend that a bit to the yen, but definitely the dollar is receiving a lot of support,” he said.

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 Slides Against US Dollar as CBN Devalues Naira

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DOLLAR CURRENCY

Naira Remains Pressure Against US Dollar as CBN Devalues Naira by 5.54%

The Naira remained at a record low against the United States dollar on the black market amid broadly expected devaluation announcement from the central bank.

The Naira was exchanged at N461 to a US dollar on the black market on Tuesday and early morning of Wednesday. Its lowest in almost three years.

This decline continues against the British Pound as the local currency traded at N558, depreciated by N3 from the N555 it traded during the weekend.

Against the Euro common currency, the Naira opened the day from N504, representing N2 depreciation from the N502 it was exchanged on Tuesday.

On the Investors and Exporters’ Forex Window, the local currency remained flat on Tuesday at N386.50 to a United States dollar. However, it opened at N387.32 on Wednesday and quickly hits N391.35 before pulling back at around 2:18 pm Nigerian time.

Accordingly, investors traded a total turnover of $103.37 million during the trading hours of Tuesday, according to the FMDQ Group.

The latest data on the FMDQ Group website shows that the Central Bank of Nigeria (CBN) official exchange rate was moved by 5.54 percent from N361 per US dollar to N381. This further validated the recent rumour that the International Monetary Fund (IMF) was forcing the Federal Government to abide by one of the main conditions of the $3.4 billion loan procured in April before it can access the $1.5 billion request presently before the Fund.

The IMF had requested for a unified foreign exchange rate across the market and demanded the apex bank allow market forces to dictate forex rates.

Therefore, despite the Federal Government reluctant to adjust the nation’s foreign exchange, the weak foreign reserves amid rising demand for US dollars by foreign investors looking to abandon the economy has compelled the apex bank to move its official exchange rate from N360 to N380 per US dollar to investors and exporters.

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CBN Devalues Naira Again, Official Rate Now N381/$ on the I&E Forex Window

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CBN Devalues Naira by 5.54% Against the US Dollar

The Central Bank of Nigeria (CBN) has devalued the Nigerian Naira once again, according to the available data on the FMDQ Group.

The apex bank devalued the local currency by 5.54 percent from N361 to N381 against the United States dollar, making it the second time in the last six months that the Naira would be devalued to commodate the change in economic fundamentals and the nation’s dwindling revenue generation.

CBN official rate

The apex bank first devalued the Naira by 15 percent in March following more than 60 percent decline in global oil prices and substantial depreciation in the nation’s foreign reserves due to COVID-19 disruption.

This coupled with Nigeria’s weak fiscal buffer weighed on the nation’s economic outlook as experts, investors and businesses immediately started projecting that at some point the apex bank would be forced to devalue the local currency again.

However, despite the central bank calling them speculators and hoarders with one motive, to profit from the nation’s economic situation. They insisted that with crude oil projected to remain between $35 to $45 per barrel through 2021 and foreign reserves already weak at $36.151 billion in a nation where over 90 percent of what its citizen consumes are imported, the apex bank will lose its ability to intervene at the nation’s foreign exchange, especially with foreign investors looking to move out about $5 billion.

While the central bank has not updated the quote on its official website from N360 to N380 as shown below, it has started selling to investors and exporters at N381, up from the old N361.

CBN 1

Again, this explained why the Naira-USD exchange rate slid to N461 on the black market in the last two weeks and remained between N460-N462 ever since.

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CBN Starts Using N380/$ Official Rate, Expects to Make it Official Soon

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Godwin Emefile

CBN Moves Official Exchange Rate to N380 Per US Dollar

The Central Bank of Nigeria (CBN) has started using N380 as its official exchange rate for the United States dollar, according to a BusinessDay report.

The report noted that the apex bank recently disbursed the Federal Government’s monthly allocation to the three tiers of government using the new forex rate. Therefore, resulting in over N70 billion extra payment.

While the apex bank is yet to make an official announcement and still have the N360 exchange rate stated on its website as the nation official rate, an anonymous senior official of the central bank interviewed by BusinessDay said “yes, it is aimed at moving the rate closer to that of the Investors and Exporters (I&E) window, which traded at N386/$1 yesterday.

“From time to time, adjustment would continue to happen, either upward or downward in line with market fundamentals. Certainly, no single rate can be achieved, but we would keep moving towards I&E rate.”

It would be recalled that Godwin Emefiele, the Governor, CBN, about ten days ago told a group of foreign investors that the apex bank is working towards achieving a single foreign exchange rate around the Nigerian Autonomous Foreign Exchange Market (NAFEX)/Investors and Exporters’ Forex window.

The CBN governor had stated that “what we mean by exchange rate unification is moving towards the NAFEX. NAFEX is our dominant market for the purchase and sale of forex and it is a free market where everybody is free to sell their dollars and those who want to buy are free to buy dollars.

“That means that whether you are a businessman, a bank, CBN, and you have dollars, you can bring it to the market to sell and if you want to buy dollars, you can come to the market.

“Like some of you must have seen, three years before 2019, we saw a relatively stable forex market because the NAFEX rate and even the rate at which the central bank transacts business outside the NAFEX were substantially close to each other. So, the CBN will continue to pursue unification around the NAFEX.”

Meanwhile, the Nigerian Naira traded at a record low of N462 against the US dollar on the black market during the weekend.

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