Exchange Rate Archives - Gifted Analysts

US Dollar Share of Global Foreign Exchange Reserves Drops to 25-Year Low

By Joshua OlorunsaiyePosted on May 15, 2021Posted in Africa & World Economy, AgenciesTagged Central Banks, Currencies, Exchange Rate, Foreign Exchange Reserves, US DollarNo Comments

The share of US dollar reserves held by central banks fell to 59 percent—its lowest level in 25 years—during the fourth quarter of 2020, according to the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) survey. Some analysts say this partly reflects the declining role of the US dollar in the global economy, in the face of competition from other currencies used by central banks for international transactions. If the shifts in central bank reserves are large enough, they can affect currency and bond markets.

Nigeria: A Frail Giant?

By Fawaz AyobamiPosted on April 8, 2021Posted in EconomyTagged Bond, Debt, Debt Profile, Devaluation, Exchange Rate, External Reserves, FDI, forex, Ghana, Nigeria, World BankNo Comments

Since President Muhammadu Buhari’s re-election in 2019, the country has faced a myriad of social and economic challenges. Inflation had surged from 11.40% in May 2019 to 17.33% last month; the Naira has been devalued three times, losing 33% of its value, insecurity has increased, and the general investment climate has waned. All these have happened while Nigerians have not seen any meaningful increase in their economic welfare: the country slumped into a second recession in five years. Many states have found it challenging to implement the new minimum wage signed into law in 2019. We also note that even if all the states had implemented the new minimum wage, the total number of civil servants to the entire labour force is considerably low. To sum it, you would still be worse off if you hold 2X the same Naira note you had in 2010 today.

The Unholy Union Between the Naira and Devaluation

By Fawaz AyobamiPosted on February 28, 2021Posted in EconomyTagged Balance of Payment, cbn, Devaluation, Exchange Rate, FDI, FPI, naira, Oil Price, Trade Balance4 Comments

In 2020, the Naira lost 25% and 27% of its value at the NAFEX and parallel exchanges, respectively. This quickly disrupted my plans, as I had planned to upskill and purchase some courses priced in dollars at the onset of the year. My disappointment prompted me to visit the CBN’s website in search of its policy stance per the Naira. The website says the apex bank’s exchange rate policy is managed floating – a market-friendly term adopted by developing countries who operate some form of pegged regime. I murmured, why did the Naira not appreciate, and why is it always under severe downward pressure?

Navigating Capital Flows – An Integrated Approach

By Adebisi SamuelPosted on December 9, 2020Posted in Africa & World EconomyTagged Capital Flows, Capital Market, Exchange Rate, Fiscal Policy, IPFNo Comments

International capital flows provide significant benefits for economic development but can also generate or amplify shocks. This dilemma has long posed challenges for policymakers in many open economies.

While flexible exchange rates can act as a useful shock absorber in the face of capital flow volatility, this mechanism does not always offer sufficient insulation, in particular when access to global capital markets is interrupted or market depth is limited.

Policy Trilemma and Interest Rate Behaviour in Nigeria

By Joshua OlorunsaiyePosted on November 18, 2020Posted in EconomyTagged cbn, Exchange Rate, Interest Rate, Monetary Policy TrilemmaNo Comments

Policy makers face trade-off in dealing with exchange rate management, monetary independence and concerns about capital mobility simultaneously. This
study empirically examines the effects of Nigeria’s trilemma policy path on
interest rate using data spanning from 1997:Q1 to 2017:Q3. It equally incorporates the role of external reserves in buffering these effects.

COVID-19 Response in Emerging Market Economies: Conventional Policies and Beyond

By Abubakar AbdulrahmanPosted on August 6, 2020Posted in Africa & World EconomyTagged COVID-19, Emerging Markets, Exchange Rate, IMF, Pandemic, World EconomyNo Comments

The economic impact of the COVID-19 pandemic on emerging market economies far exceeded that of the global financial crisis. Unlike previous crises, the response has been decisive just like in advanced economies. Yet, conventional policies are reaching their limit and unorthodox policies are not without risks.

Dominant Currencies and the Limits of Exchange Rate Flexibility

By Aminu MusaPosted on July 20, 2020Posted in AgenciesTagged COVID-19, Currency, dollar, Exchange Rate, IMFNo Comments

Faced with an unprecedented shock of collapsing global demand and commodity prices, capital outflows, major supply chain disruptions and a generalized drop in global trade, many emerging markets and developing economies’ (EMDEs) currencies have weakened sharply. Will these currency movements support the recovery of these economies?

The Inflation Interplay in Nigeria

By Sheriffdeen AdeotiPosted on July 17, 2020Posted in EconomyTagged Exchange Rate, External Reserve, Foreign, Inflation Rate, NBS, Nigeria, South Africa, TradeNo Comments

Five years ago, 5 naira and 10 naira currency were a significant part of our national denomination, and you could walk into any shop and get sweets, biscuits for that amount. This same 5 and 10 naira are becoming hard to come by, with little or no purchasing power. Coins have gone into extinction, confined to the books of accounts only, telling us the currency keeps losing its value with the passage of time.

Average Official Exchange Rate Increases by 132% in 14 Years; External Reserve Grew by 51%

By Abdulazeez KurangaPosted on October 16, 2019Posted in Analytics, ArticlesTagged and External Reserve, cbn, Exchange Rate, in Nigeria, NBS, Relationship between2 Comments

From 2005 to 2018, the average rate of exchange has increased by 132% while the external reserve increased by 51% from $28.3bn in 2005 to N42.6bn in 2018. This shows that the change in both exchange rate and external reserve is not proportional and whenever there is a decline in external reserve, the CBN tends to devalue the naira much more than the decline in external reserve.

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