The winds of change are now supporting the US dollar, as the US greenback emerged victorious from the recent simmering currency wars. New competing currencies, including the Kenyan shilling and Nigerian naira, are losing strength against the US dollar, falling to new lows in the latest developments.
Also read: US Dollar hammers Chinese Yuan, Indian Rupee and Japanese Yen
KSH, Naira Hit New Lows Against Dollar
The Kenyan shilling, which outperformed the dollar in March and early April, has now taken a drastic turn. The KSH is currently trading at 131.44 shillings, marking a significant low against the dollar in recent times.
“Data from the Central Bank of Kenya shows that one dollar was trading at 131.44 shillings at the end of last week, representing a fifth consecutive day of weakening for the local unit since April 11. “
Additionally, the rise of KSH has been characterized as temporary. It has been characterized as a weak recovery, mainly due to the government’s plans to benefit from short-term investments that may not prove lucrative in the long term.
“Gains from short-term investments often dissipate quickly when interest rates start to fall, as seen in the Kenya Treasury bond auction.”
Similarly, the Naira collapsed against the dollar, mainly due to the unprecedented intervention of the Central Bank of Nigeria. The fall of the Naira, the US dollar, prompted his government to take measures to stabilize the value of the Naira in the global market.
“Data shows that the CBN withdrew about $2.16 billion to stabilize the naira. As of April 15, 2024, data from the apex bank revealed that external reserves were now positioned at $32.29 billion…Last week, the CBN gave N1,101 to the dollar, but the parallel market sold off at 950 naira. This is what even made some BDCs not bid for dollar collection from the CBN because when you collect that dollar from the CBN, you automatically run at a loss because we are selling at N950. Unfortunately for the dollar, banks are now interbanking.” The shared point of sale
USD: the new winning currency
The US dollar has once again proven its power and potential by displaying its invincible position. According to Bloomberg, the outlet’s U.S. Dollar Index gained 4%, signaling renewed interest and prospects for this colossal global currency.
According to Kobeissi’s letter, the US dollar has become one of the strongest currencies compared to other major countries. The handle has updated a detailed chart, depicting the prowess of the dollar against the Turkish lira, INR, Chilean peso and Brazilian real.
Also Read: US Dollar Fails to Overtake Nigerian Naira Despite Overtaking Yuan and Yen
“The US dollar has been one of the best performing currencies of 2024 so far. Some emerging market currencies have weakened by as much as 10% against the US dollar. The Chilean peso, Turkish lira and Brazilian real weakened by 10.5%, 9.2% and 8.1%, respectively. A stronger U.S. dollar makes doing business with the United States more expensive for countries.
reference: watcher.guru