- Pound Jumps Amid Speculation U.K. Can Reach Single-Market Deal
The pound rose as investors seized on the prospect of the U.K. retaining preferential access to the European Union’s single market after Brexit.
Sterling reached its strongest level in two months as Brexit Secretary David Davis said the U.K. would consider making contributions to the EU in order to secure the best possible access to the single market. Dutch Finance Minister Jeroen Dijsselbloem told the Times of Malta that Britain might be able to participate in the internal market, albeit at a cost. The pound pared its gain later in the European day.
The pound’s advance is evidence of how sensitive the currency is to officials’ comments about the nature of Britain’s relationship with the EU once it quits the bloc. Sterling is the worst-performing major currency since the U.K.’s June 23 referendum, dragged down by concern the nation is headed for a so-called hard exit where unfettered single-market membership is sacrificed for immigration controls.
“If the U.K. does stay in the single market, it’s very likely that sterling will go up,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London. The comments “very much shift the pendulum away from hard to soft Brexit. Embedded within a soft Brexit is access to the single market one way or another.”
The pound climbed 0.5 percent to $1.2572 as of 4:40 p.m. London time, having reached the strongest level since Oct. 6. It’s down 16 percent since the EU vote. It appreciated 0.2 percent to 84.52 pence per euro.
The FTSE 100 Index of shares, which is dominated by companies that sell goods abroad and benefit from a weaker currency, fell 0.5 percent. U.K. government bonds declined with their euro-zone peers, pushing the 10-year gilt yield six basis points higher to 1.48 percent.
Tariff-free access to the EU is “essential” to food producers and retailers, chief executive officers including those from Wm Morrison Supermarkets Plc, Dairy Crest Group Plc and J Sainsbury Plc wrote in a letter to The Times. The Institute for Fiscal Studies estimated in August that retaining single-market membership could be worth around 4 percent of gross domestic product by 2030, the equivalent of 75 billion pounds.
“This is the first time we can recall a senior EU official acknowledge the possibility of the U.K. having access to the internal market since Brexit,” said Derek Halpenny, European head of global markets research at Bank of Tokyo-Mitsubishi UFJ Ltd., referring to Dijsselbloem’s comments.
Naira Continues Downward Trend on Black Market, Trades at N465/$
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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