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CURRENCIES

Investors flock to US dollar, Gold, Bitcoin, as Global Stocks record heavy sell-offs

The US dollar is stronger this morning on the back of a marked drop in risk appetite in European and US markets.

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The U.S dollar closed high on Monday, hitting a six-week high, as currency traders and global investors rushed into the safe-haven currency.

This is coming on growing COVID-19 fears and worries over the U.S. Congress’ stimulus impasse drove a heavy sell-off in almost all other assets that include gold, Bitcoin, and Stocks.

What we now; At the time this report was drafted, Bitcoin traded at $10,463.98 with a daily trading volume of $23,554,819,012. BTC price is down -4.6% in the last 24 hours.

Overnight on Wall Street, the Dow Jones Industrial Average fell 1.84%, the S&P 500 lost 1.16%, and the Nasdaq Composite dropped 0.13%.

Gold spot lost about 2.1% to trade at $1,909.05 per ounce on Monday, after falling as much as 3.4% earlier in the session, its lowest since Aug. 12. U.S. gold futures settled down 2.6% at 1,910.60.

Australia’s S&P/ASX 200 dropped 0.7% pressured by miners and energy stocks, while China’s blue-chip index shed 0.1% and Hong Kong’s Hang Seng index was down 0.5%. Japanese markets were closed for a public holiday

However, at the time this report was drafted, U.S. Dollar Index, which tracks the greenback against a basket of other currencies, dropped some gains to trade at 93.608

Quick fact: The U.S. Dollar Index tracks the greenback against a basket of major global currencies such as the Japanese yen, British pound sterling, Swedish Krona, Euro, etc. Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries like Europe, and Japan, would need to pay more dollars in fulfilling such payment obligations.

Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to our source gave vital insights on the safe-haven currency, saying:

“The US dollar is stronger this morning on the back of a marked drop in risk appetite in European and US markets, but off overnight highs, as US stocks are rebounding in good order.

“Two factors explain much of the risk aversion. Banking shares are sharply lower following the International Consortium of Investigative Journalists report examining bank behavior in the context of Suspicious Activity Reports. Travel and leisure names are weaker in Europe on the back of continued angst around the rising COVID-19 case count in the Eurozone and the UK.

“The fickle nature of currency trading these days suggests that as US stocks fall, the USD rises, reflecting the USD’s dominance in demand when there are big down moves in risk sentiment.”

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CURRENCIES

Exchange rate gains at NAFEX window as dollar supply improves significantly

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Forex turnover rose significantly by 464% as Nigeria’s exchange rate at the NAFEX window appreciated against the dollar to close at N385.67/$1 during intraday trading on Thursday, October 15.

Also, the naira remained stable against the dollar, closing at N462/$1 at the parallel market on Thursday, October 15, 2020 as BDC operators get another round of dollar supply from CBN

This is also despite the continuation of the protest against the special anti-robbery unit (SARS) by the Nigerian youth which has limited movement in major cities across the country especially Lagos.

Parallel market: According to information from Abokifx, a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira remained stable against the dollar to close at N462/$1 on Thursday. This was the same rate that it exchanged for on Wednesday, October 14.

Current developments

  • The local currency has strengthened by about 7.8% within the last one week at the black market, as the CBN introduced some measures targeted at exporters and importers, in order to try to boost the supply of dollars in the foreign exchange market, and reduce the high demand for forex by traders.
  • The CBN has sold over $450 million to BDCs since they resumed forex sales on Monday, September 7, 2020. This was expected to inject more liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.
  • However, the exchange rate against the dollar has failed to sustain the initial gains made, after the CBN announced plans to provide liquidity.
  • BDC operators have urged the apex bank to reconsider the margin allowed for the currency traders, as it was inadequate to meet their expenses.
  • We also noted that forex traders monitored during the previous week, appeared to hoard forex, as they anticipated further depreciation in the market.
  • There has been a drop in speculative buying of foreign exchange, although demand backlog by manufacturers and foreign investors still puts pressure, and creates a volatile situation in the foreign exchange market.

NAFEX: The Naira appreciated against the dollar at the Investors and Exporters (I&E) window on Thursday, closing at N385.67/$1.

  • This represents a 16 kobo gain when compared with the N385.83/$1 that it exchanged for on Wednesday, October 14.
  • The opening indicative rate was N386.04 to a dollar on Wednesday. This represents a 34 kobo gain when compared to the N386.38 that was recorded on Tuesday.
  • The N392.78 to a dollar is the highest rate during intraday trading before closing at N385.67. It also sold for as low as N382/$1 during intraday trading.

Forex turnover: Forex turnover at the Investor and Exporters (I&E) window increased significantly by 464% on Thursday, October 15, 2020.

  • According to the data tracked  from FMDQ, forex turnover rose from $29.53 million on Wednesday, October 14, 2020, to $166.55 million on Thursday, October 15, 2020.
  • The CBN had in the past weeks moved to clear the huge backlog of foreign exchange demand, especially by foreign investors wishing to repatriate back their funds.
  • The huge increase in forex supply after yesterday’s drop reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
  • The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.
  • Total forex trading at the NAFEX window in the month of August was about $857 million, compared to $937 million in July.
  • The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand and shaky economy that has been hit by the coronavirus pandemic
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CURRENCIES

Naira falls again at black market as #EndSARS protest limits movement.

Naira depreciated marginally against the dollar, closing at N462/$1 at the parallel market on Wednesday.

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Forex turnover declined by 63% as Nigeria’s exchange rate at the NAFEX window depreciated against the dollar to close at N385.83/$1 during intraday trading on Wednesday, October 14.

Also, the naira depreciated marginally against the dollar, closing at N462/$1 at the parallel market on Wednesday, October 14, 2020.

Nigerian Youth has been protesting demanding an end to SARS, the special anti-robbery unit of the Nigerian Police. Protest has limited movement in major cities across the country.

Parallel market: According to information from Abokifx, a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira depreciated against the dollar to close at N462/$1 on Wednesday. This represents a N1 drop when compared with the N461 that it exchanged for on Tuesday, October 13.

Current developments

  • The local currency has strengthened by about 7.8% within the last one week at the black market, as the CBN introduced some measures targeted at exporters and importers, in order to try to boost the supply of dollars in the foreign exchange market, and reduce the high demand for forex by traders.
  • The CBN has sold over $450 million to BDCs since they resumed forex sales on Monday, September 7, 2020. This was expected to inject more liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.
  • However, the exchange rate against the dollar has failed to sustain the initial gains made, after the CBN announced plans to provide liquidity.
  • BDC operators have urged the apex bank to reconsider the margin allowed for the currency traders, as it was inadequate to meet their expenses.
  • We also noted that forex traders monitored during the previous week, appeared to hoard forex, as they anticipated further depreciation in the market.
  • There has been a drop in speculative buying of foreign exchange, although demand backlog by manufacturers and foreign investors still puts pressure, and creates a volatile situation in the foreign exchange market.

NAFEX: The Naira remains stable against the dollar at the Investors and Exporters (I&E) window on Wednesday, closing at N385.83/$1.

  • This represents a 17 kobo gain when compared with the N386/$1 that it exchanged for on Tuesday, October 13.
  • The opening indicative rate was N386.04 to a dollar on Wednesday. This represents a 34 kobo gain when compared to the N386.38 that was recorded on Tuesday.
  • The N386 to a dollar is the highest rate during intraday trading. It also sold for as low as N380/$1 during intraday trading.

Forex turnover: Forex turnover at the Investor and Exporters (I&E) window declined further by 62.9% on Wednesday, October 14, 2020.

  • According to the data tracked  from FMDQ, forex turnover dropped from $79.53 million on Tuesday, October 13, 2020, to $29.53 million on Wednesday, October 14, 2020.
  • The CBN had in the past few weeks moved to clear the huge backlog of foreign exchange demand, especially by foreign investors wishing to repatriate back their funds.
  • The drop in forex supply reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
  • The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.
  • Total forex trading at the NAFEX window in the month of August was about $857 million, compared to $937 million in July.
  • The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand and shaky economy that has been hit by the coronavirus pandemic
Continue Reading

CURRENCIES

Exchange rate falls across forex markets as dollar supply drops

The naira depreciated against the dollar, closing at N460/$1 at the parallel market on Monday.

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Forex turnover dropped by 24% as Nigeria’s exchange rate at the NAFEX window depreciated against the dollar to close at N386/$1 during intraday trading on Monday, October 12

Also, the naira depreciated against the dollar, closing at N460/$1 at the parallel market on Monday, October 10, 2020, as the Bureau De Change Operators await another round of dollar supply from the Central Bank of Nigeria.

Parallel market: At the black market where forex is traded unofficially, the Naira depreciated against the dollar to close at N460/$1 on Monday, according to information from Abokifx, a prominent FX tracking website. This represents a N3 drop when compared with the N457 that it exchanged for on Friday, October 9.
Current developments

  • The local currency has strengthened by about 7.8% within the last one week at the black market, as the CBN introduced some measures targeted at exporters and importers, in order to try to boost the supply of dollars in the foreign exchange market, and reduce the high demand for forex by traders.
  • The CBN has sold over $450 million to BDCs since the resumed forex sales on Monday, September 7, 2020. This was expected to inject more liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.
  • However, the exchange rate against the dollar has failed to sustain the initial gains made, after the CBN announced plans to provide liquidity.
  • BDC operators have urged the apex bank to reconsider the margin allowed for the currency traders, as it was inadequate to meet their expenses.
  • We also noted that forex traders monitored during the previous week, appeared to hoard forex, as they anticipated further depreciation in the market.
  • There has been a drop in speculative buying of foreign exchange, although demand backlog by manufacturers and foreign investors still puts pressure, and creates a volatile situation in the foreign exchange market.

NAFEX: The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Friday, closing at N386/$1.

  • This represents a 17 kobo drop when compared with the N385.83 that it exchanged for on Friday, October 9.
  • The opening indicative rate was N386.33 to a dollar on Monday. This represents a 62 kobo drop when compared to the N385.71 that was recorded on Friday.
  • The N392.89 to a dollar is the highest rate during intraday trading before it closed at N385.83. It also sold for as low as N384/$1 during intraday trading

Forex turnover: Forex turnover at the Investor and Exporters (I&E) window, declined by 24.1% on Friday, October 9, 2020.

  • According to the data tracked  from FMDQ, forex turnover dropped from $134.83 million on Friday, October 9, 2020, to $102.35 million on Monday, October 12, 2020.
  • The CBN had in the past few weeks moved to clear the huge backlog of foreign exchange demand, especially by foreign investors wishing to repatriate back their funds.
  • The drop in forex supply reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
  • The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.
  • Total forex trading at the NAFEX window in the month of August was about $857 million, compared to $937 million in July.
Continue Reading
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