- Dollar Weakens on U.S. Politics; Equities Falter
Stocks pared recent gains and the dollar sat at an 11-month low as investors assess an investigation into the U.S. president that may stall his economic agenda. The Australian dollar plunged the most since May after a dovish speech by the central bank deputy governor.
European equity markets opened lower, echoing moves in Asia, while U.S. index futures were steady. The New Zealand dollar led G-10 currency gains against the greenback, hitting its highest since September after the country’s finance minister said the kiwi’s level reflected a strong economy. The euro continued to gain and was at its highest intraday level since Aug. 24. U.S. Treasuries and Australian bonds advanced.
Global equities have continued hitting fresh highs this week amid corporate results that have reinforced faith in earnings and the economy. While it’s early in the U.S. reporting season, some 83 percent of companies have topped estimates on the bottom line. Asian shares are up more than four percent in the past two weeks, with markets in Japan and Hong Kong near two-year highs.
Politics in Washington are again at the forefront after central banks dominated proceedings earlier in the week, with reports that U.S. special counsel Robert Mueller is expanding his investigation of Donald Trump. The news came less than a day after the president told the New York Times that any digging into his finances would cross a red line.
Here are the main moves in markets:
- The MSCI Asia Pacific Index was down 0.2 percent as of 3:15 p.m. Hong Kong time, its first decline in 10 days. Japan’s Topix Index fell 0.2 percent Friday, though it’s still near its highest since August 2015. Australia’s S&P/ASX 200 Index slid 0.7 percent.
- The Euro Stoxx 50 dropped 0.2 percent after closing little changed Thursday. The FTSE 100 rose 0.1 percent, extending gains to a third day.
- The Hang Seng Index fell 0.1 percent, the Shanghai Composite Index lost 0.2 percent. Futures on the S&P 500 Index were unchanged after the underlying gauge closed flat Thursday.
- The Aussie tumbled 0.7 percent to 79.00 U.S. cents, after RBA Deputy Governor Guy Debelle said board discussions on the level of the neutral interest rate shouldn’t be interpreted as a signal for tighter policy. Governor Philip Lowe is due to speak next week. The kiwi rose 0.4 percent to 74.24 U.S. cents following comments by Steven Joyce.
- The Bloomberg Dollar index was down 0.2 percent, in line for a weekly loss of 0.8 percent. The yen was up 0.1 percent at 111.75 per dollar.
- The euro jumped 0.3 percent to $1.1667 at a 23-month high, building on its 1 percent surge Thursday.
- WTI crude was steady at $46.90 a barrel after losing 0.9 percent Thursday.
- Gold was up 0.3 percent at $1,247.84 an ounce, rising for a second week.
- The yield on U.S. 10-year Treasuries fell one basis point to 2.25 percent.
- The yield on Australian government notes with a similar maturity was down four basis points at 2.70 percent, and the three-year yield fell seven basis points to 2.02 percent.
Naira Continues Downward Trend on Black Market, Trades at N465/$
Naira Extends Decline on Black Market, Exchanges at N465/$
Naira extended its decline against the United States dollar on Friday as scarcity amid devaluation persists.
The local currency lost N2 against the US dollar from N463 it traded on Thursday to N465 on Friday. Its lowest in almost three years.
Similarly, the Naira depreciated by N3 against the British Pound from N562 on Thursday to exchange at N565 on Friday.
While against, the European common currency, the Nigerian Naira lost N1 from N505 it was sold on the back market on Thursday to N506 on Friday.
The local currency has been on a downward trend since the news of foreign exchange unification broke out about two weeks ago. This coupled with 5.54 percent devaluation from N360 official Naira-US Dollar exchange rate to N380, compounded Naira woes.
On the Investors and Exporters’ Forex window, the Naira appreciated by 25 kobo or 0.06 percent against the US dollar to trade at N386.50 on Friday.
Activity on the window, however, improved from $11.96 million traded on Thursday to $25.19 million Friday.
Naira Declines Against Pound, Euro After Devaluation
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.
Naira Slides to N463 Against US Dollar on Black Market
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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