Connect with us

Forex

Goldman Sachs Calls Dollar Bottom as Economic Concern Subsides

Published

on

Goldman

Goldman Sachs Group Inc. says the dollar slump is over.

The greenback has rallied almost 1 percent from a one-year low reached last week, even after April payrolls data showed the weakest job growth in seven months. Goldman Sachs says the rally is a sign that market expectations for growth and Federal Reserve interest-rate increases have fallen too far, too fast, positioning the currency for a rebound. Strategists at Societe Generale SA and Brown Brothers Harriman & Co. are less bullish, saying a broader dollar recovery will depend on further economic data.

“We remain dollar bullish and think the trajectory is higher from here,” Robin Brooks, Goldman Sachs’s New York-based chief currency strategist, said in an interview with Bloomberg Radio. “The reaction on Friday to a meaningfully weaker-than-expected payrolls was telling: We had a disappointing jobs number and the dollar actually bounced.”

Brooks estimates that the dollar will advance 15 percent during the next two years as U.S. monetary policy normalizes, he said in a report Tuesday. This isn’t the first time Goldman Sachs has reiterated its dollar-bullish stance in recent months, a view that hasn’t always panned out. The bank closed a dollar position against a equally weighted basket of euro and yen in February, one of its top trade recommendations for 2016, with a potential loss of about 5 percent.

The greenback saw its biggest advance in six months last week, paring its 2016 decline to 4.1 percent. The dollar fell for a third straight month in April, the longest stretch since before it embarked on a 20 percent rally in July 2014, on speculation the Fed will take a slower path to raising rates as it factors in headwinds from slowing global economic growth.

The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 peers, was little changed as of 11:52 a.m. in New York, after climbing 1.5 percent last week, the most since Nov. 6. The U.S. currency rose 0.8 percent to 109.17 yen, touching the highest since April 27.

Market Outlook

While Fed policy makers have recently talked up the potential for rate-hikes in the near term, reiterating that June’s FOMC meeting will be “live” and forecasting two potential rate increases this year, markets aren’t convinced.

Traders have already heavily discounted the likelihood of any Fed action before the fall, predicting just a 4 percent change of a rate hike next month — evidence, Goldman Sachs says, that markets are increasingly looking away from the Fed and to other central banks to set the dollar in motion.

“The key issue facing the foreign exchange market is whether the modicum of strength the U.S. dollar demonstrated last week is the beginning of a sustainable move,” Marc Chandler, global head of currency strategy in New York at Brown Brothers Harriman, wrote in a report. “It is possible that the market is again at a juncture in which the price action will drive the narrative rather than the other way around.”

Do you agree the dollar slump is over, even after disappointing employment report?

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

CBN Moves Against 55 Companies, Individuals for Forex Infractions

Published

on

cbn

CBN Commences Investigation into FX Activities of  55 Companies, Individuals

In an effort to ease foreign exchange pressure and better manage the dwindling foreign reserves, the Central Bank of Nigeria has intensified fight against companies and individuals taking advantage of the nation’s limited foreign reserves.

The apex bank said it has commenced investigations into the activities of 55 companies and individuals engaging in foreign exchange transactions.

The central bank attributed the reason for the investigation to foreign exchange deals outside the official Investors & Exporters (I&E) forex window.

Some of the companies being investigated are Stallion Nigeria Limited, Interswitch Nigeria Limited, as well as a leading global shipping line, CMA CGM Nigeria Shipping Limited.

Other big names on the list are Petro-Afrique Energy Services Limited, Steel Force Far East Limited, Auto Petroleum Company Limited, Cavendish Mechanicals Limited, Aquashield Oil & Marine Limited, Haitch & Elf Integrated Services Limited, Fenog Nigeria Limited, and Promasidor Nigeria Limited.

The I&E window was established to facilitate foreign exchange transactions and encourage a moderate market-determined exchange rate.

Continue Reading

Forex

Naira Declines to N465 Against US Dollar on Black Market

Published

on

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.

Continue Reading

Forex

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

Published

on

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.

 

Continue Reading

Trending