Oct 8, 2010 By Babajide Komolafe

 

The improving fortunes of the naira continued yesterday bouyed by $420 million dollars autonomous supply from Nigeria National Petroleum Corporation (NNPC) and ExxonMobil. Consequently the interbank foreign exchange rate dropped further by 73 kobo to N151.65 per dollar from N152.38 the previous day.

 

Similarly, the naira recorded marginal appreciation of  three kobo at the official foreign exchange auction yesterday with the official exchange rate dropping to N149.85 per dollar from N149.88 on Monday. The Central Bank of Nigeria increased foreign exchange sold by 13 per cent   to $439 million from $387 million sold on Monday.Meanwhile, on the global scene the dollar tumbled to a new 15-year low against the yen and an 8-1/2 month low against a basket of currencies on Wednesday on rising expectations the U.S. Federal Reserve will further ease monetary policy.

 

The euro rose above its 200-week moving average around $1.3921, hitting a fresh eight-month high as the U.S. dollar extended losses.The yen climbed to levels where the Bank of Japan last month sought to weaken it. Investors were reluctant to push the dollar too low against the Japanese currency over fear of a new intervention. Dollar losses accelerated after a report showed U.S. private employers unexpectedly cut 39,000 jobs in September after an upwardly revised gain of 10,000 in August.

 

The private-sector report from ADP, a payrolls processor, gives a glimpse of the labor market ahead of Friday’s government data on U.S. non-farm payrolls for September.“It all adds to the case for the Fed coming in to create more stimulus,” said Eric Viloria, currency strategist at Forex.com in New York.

 

The comments of Chicago Federal Reserve Bank President Charles Evans, quoted as saying the central bank should do much more to spur the economy, also kept negative dollar sentiment firmly intact. This has intensified speculation the Fed will resume quantitative easing, possibly in November, by buying more bonds.Midway through the New York session, the dollar dipped as low as 82.75 yen JPY=EBS on electronic trading platform EBS before recovering to 82.86 yen, still down 0.4 percent on the day.  The session peak was only 83.27 leaving the dollar/yen trading in a tight range despite the extreme low.

 

Wednesday’s low was below the 82.87 level where the Bank of Japan moved to weaken the yen on September 15. The greenback was well below the high of 83.99 yen it hit on EBS after the Bank of Japan (BOJ) announced easing steps on Tuesday.The dollar was down 0.5 percent against a basket of currencies  at 77.370, having fallen as far as 77.361.

 

The euro gained 0.7 percent at $1.3925 EUR= in a volatile session that saw it swing between losses and an eight-month high of $1.3930 on the EBS trading platform.The single currency was helped earlier by data showing a surge in German manufacturing orders in August, leaving a potential for the single currency to test $1.40.

 

Source:Vanguard