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US Retail Sales Boost Economic Outlook

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  • US Retail Sales Boost Economic Outlook 

Consumer spending surged in June as households increased spending on automobiles and a range of other items, supporting economists’ projection for broad growth in the second quarter.

Retail sales increased 0.5 per cent in June, lower than the upwardly revised 1.3 per cent recorded in May, the Commerce Department reported on Monday. May’s gain was the biggest since September 2017.

On a yearly basis, retail sales increased by 6.6 per cent.

Core retail sales, excluding automobiles and food items, were unchanged in June after the revised 0.8 per cent gain filed in May.

While the strong data indicates strengthening economy, it also supports federal reserve economic stance. Therefore, together with the strong job market and rising inflation, the Federal Reserve is likely to keep raising interest rates as widely projected.

“This puts the economy in a very, very good position as it starts its tenth year of forward movement in July,” said Chris Rupkey, chief economist at MUFG in New York. “This strengthening economy gives the Federal Reserve the green light to raise rates a third time this year at their September meeting.”

In addition to the strong retail numbers, trade deficit improved slightly in April and May, further supporting the expectations of a strong GDP reading in the second quarter. Another sign that growth is broad-based.

Consumer spending continued to support growth despite the ongoing trade war.

The US dollar gained slightly against emerging currencies, rising to 0.7418 against the Australian dollar.

AUDUSDDaily

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 market.

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Forex

Naira Plunges Against British Pound to N600 on Black Market

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pound-sterling

Naira Falls  by N20 Against British Pound to N600

Economic uncertainties amid low oil prices weighed on the Nigerian Naira against its global counterparts.

The Naira plunged against the British Pound by N20 from N580 it exchanged two weeks ago on the black market to N600 on Thursday and remained at the same rate on Friday morning.

The local currency has remained under pressure since Coronavirus disrupted global economics and demand for global oil earlier in the year. Nigeria, an oil-dependent economy, was one of the nations affected by the low oil prices and disruption of global supply chain and logistics.

This coupled with a series of local challenges like the rising cost of servicing debt to revenue, weak manufacturing sector that depends on importation for most of its raw materials, unclear economic direction that deterred foreign investors and eventually weighed on the nation’s foreign direct investment and capital importation hurt the nation’s economic outlook and investment sentiment.

Against the Euro common currency, the Naira declined by N35 to N545 on Thursday, down from N510 it traded about three weeks ago.

This decline continues against the United States dollar as the local currency traded at N474 to a US dollar, down from N465 it was exchanged three weeks ago.

The inability of the Central Bank of Nigeria to support the local currency through sufficient dollar liquidity continues to impact the manufacturing sector and other key sectors that depend on importation for operations.

Also, the scarcity dictates the Naira exchange rate to its counterparts, especially after a recent report showed foreign investors are looking to access the US dollar to repatriate their funds.

Other factors, like the recent Shoprite announcement that it was pulling out of Nigeria, Africa’s largest economy, due to falling revenue and challenging business environment compounded the nation’s woes.

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Naira Declines Slightly on the Black Market to N474/$

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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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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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