Interbank Market News Scan : A thought on creating an Afro-American currency …

My morning takeaway …

I think a currency should reflect the reality of the relationship between two distinct political economies that reside under a single flag.  I am specifically concerned with two groups under the American flag: Afro-America and the Virgin Islands of the United States.  Neither group have been fully incorporated into the American political economy.  There is only a 47-year difference between their starting attempts at incorporation into the United States with Afro Americans, at least on the surface, holding a lead in political-economic corporation due primarily to their physical presence in the contiguous United States, their 43 million population, and thus greater access to political channels.

Both Virgin Islanders and the Afro-American community have disproportionately higher poverty rates, lower incomes, and higher unemployment rates than their white American counterparts.  Both communities suffer from a dearth of capital and lack productive capacity, for now, through which they could independently sustain themselves.  Their banking markets are, like the rest of the United States, subject to the Federal Reserve, and the lip service of the Fed’s community development initiatives and the Community Reinvestment Act of 1977.

A priori, neither community draws the attention of family offices, hedge funds, investment banks, or individual trading desks in search of margin that supports any trade, including foreign exchange.  This is due primarily to both communities not having sufficient pooled natural and human resources upon which a currency (value or “energy”) can be calculated and leveraged.

Then again, under a credit creation theory of banking, this may not matter where credit, money, margin, are created out of thin air … but more on that at some other time.

In the mean-time I thought it would be interesting to add two proxy foreign exchange rates reflecting the currency of the Virgin Island (USVI) and Afro-American (AfAM) communities.  It is my endeavor, amongst too many others, to develop them in the near future …

20 May 2021

Currency PairsRates as of 2:00 pm GMT 20 May 2021Rates as of 12:44 pm GMT 19 May 2021
GHS/EUR0.14180.1419
GMD/EUR0.01610.0159
NGN/EUR0.00200.0020
SLL/EUR0.00010.0001
KES/EUR0.00750.0076
RWF/EUR0.00080.0008
ZAR/EUR0.05830.0584
MZN/EUR0.01370.0137
XCD/EUR0.30330.3033
USVI/USD0.00010.0001
AfAM/USD0.10000.1000
Source: OANDA, Alton Drew

Links you should follow …

Banks.  Three of the biggest US banking groups want the US Department of Agriculture to reconsider the terms of billions of dollars in planned debt relief for minority farmers, claiming it will cut into banks’ profits — and warn they may have to cut those same farmers off from future loans.  Banks say USDA’s debt forgiveness for minority farmers will cost them money and could affect future loans. Black farmers call that a threat. (msn.com)

Banks. Australian stocks closed higher on Thursday, marking their steepest rise in nearly two weeks, due to gains in tech and banking stocks and upbeat employment data.  Australian shares see best day in nearly 2 weeks on jobless data, banks boost | Nasdaq

Banks. In an effort stemming from the murder of George Floyd and at the behest of a Connecticut state official, a who’s who of financial institutions on Tuesday promised to address the effects of racial disparities in financial services by investing billions of dollars to support Black and Latinx communities. A state treasurer convinced big banks to commit billions of dollars to tackle racial inequities. This is the result. (msn.com)

Banks. Mike Mayo, Wells Fargo Securities senior banking analyst, joins ‘Power Lunch’ to discuss the competition banks could be facing from fintech, the future of bank branches and more. Banks are headed toward record efficiency, says Wells Fargo’s Mike Mayo (msn.com) Banks, central banks, digital currency. Can crypto benefit central banks? 3 ways digital currencies backed by central banks could benefit the global economy, according to Fitch (msn.com)

Central banks. The Bahamas became a global leader in e-money last year when it launched one of the world’s first central bank digital ­currencies—the “sand dollar”—beating China’s “digital renminbi” to the market by six months. How the Tiny Bahamas Beat Global Giants in the E-Currency Race (msn.com)

Interbank Market News Scan: If currency reflects value, Europe buys Africa on the cheap ….

My morning takeaway …

The value of a currency is determined by changes in supply and demand; the demand for Treasury notes denominated in the base currency; and the amount of the base currency held in reserve by foreign central banks.  The greater the amount of base currency held by foreign central banks, the lower the supply of the term currency, thus the higher the term currency’s price.

In the table below, the base currencies are on the left of the slash mark, the African currencies. The term currency, in the case the euro, is on the right of the slash.  So, today one Ghanaian cedi (GHS) is priced at 0.1419 euros.

At first blush it is tempting to consider the low euro price as a bad thing.  Yes, currency represents a country’s economic value and given these low absolute euro values a reader may feel despondent that Europe looks apparently with low favor on the African continent.  They would not be wrong.  The African continent has long been Europe’s supplier of resources with a well-documented imbalance in the relationship.

Coming terms with the imbalance should include African central banks and national governments taking fiscal and monetary actions to drive up their currency values.  The continent has taken small but important steps toward doing so with the creation of the African Continental Free Trade Area (AfCFTA) which went into effect last January.  The 54 signatories to the agreement hope that removing non-tariff barriers to trade, elimination of 90% of tariffs on internal trade, and the facilitation of the movement of human capital between nations will go far in stemming its move from the current colonial model and, in the words of Wamkele Mene, the AfCFTA secretariat, move Africa away from being a provider of commodities with final goods being processed elsewhere.

With a little resilience and focus, the Continent will get there and Europe will have to take another look at how she evaluates Africa’s value…

19 May 2021

Currency PairsRates as of 12:44 pm GMT 19 May 2021Rates as of 19 April 2021
GHS/EUR0.14190.1437
GMD/EUR0.01590.0162
NGN/EUR0.00200.0022
SLL/EUR0.00010.0001
KES/EUR0.00760.0077
RWF/EUR0.00080.0008
ZAR/EUR0.05840.0584
MZN/EUR0.01370.0135
Source: OANDA

Interbank Market News Scan: Remittances, foreign exchange; Africa sees average cost of remittances at 8.2% …

Foreign exchange rates of interest…

Currency PairsRates as of 8:13 am EST 17 May 2021
USD/AOA652.8280
USD/GMD50.9478
USD/GHS5.7535
USD/NGN379.9410
USD/KES108.0900
USD/SLL10134.0000
USD/RWF979.3480
USD/ZAR14.1119
USD/MZN58.3200
Source: OANDA

Links to follow …

Remittances. According to the bank’s latest Migration and Development Brief, officially recorded remittance flows to low- and middle-income countries reached US$540 billion in 2020, 1.6 per cent below the 2019 total of US$548 billion. Remittance flows remained strong during COVID-19 in 2020, says World Bank (jamaicaobserver.com)

Remittances, Philippines. Remittances continued to grow in March as more countries eased travel restrictions and reopened borders to foreign workers, the Bangko Sentral ng Pilipinas (BSP) reported Monday. Remittances up 4.9% in March (msn.com)

Remittances, Ghana. Remittances from Ghanaians grew by five per cent from $3.39 billion in 2019 to $5.57 billion in 2020, a World Bank report has said.
This was in spite of the grim economic outlook presented by the COVID-19 pandemic, which affected people’s earnings and the economies of nations worldwide last year. Remittances From Ghanaians Abroad Increase | Social | Peacefmonline.com

Remittances, Nigeria. Pan-African credit rating agency, Agusto & Co has projected that Nigeria’s diaspora remittances will reach $22 billion by 2021, representing a year-on-year (y-o-y) rise of five per cent. Agusto & Co Forecasts $22bn Diaspora Remittances for Nigeria in 2021 | THISDAYLIVE

Remittances, Kenya. Kenya is targetting to collect at least Sh700 billion from over four million Kenyans working abroad, Labour Cabinet Secretary Simon Chelugui has said. Kenya targets Sh700 billion in diaspora remittances annually (the-star.co.ke)

As of 11:43 am AST, foreign exchange rates between U.S., the Eurozone, certain African, Caribbean, Asian nations …

CAD/USD=0.7852USD/CAD=1.27263
MXN/USD=0.0505USD/MXN=19.7830
JMD/USD=0.00689USD/JMD=142.187
GYD/USD=0.0047USD/GYD=204.984
BBD/USD=0.5000USD/BBD=2.0000
TTD/USD=0.1448USD/TTD=6.6571
XCD/USD=0.37037USD/XCD=2.70
GBP/USD=1.3581USD/GBP=0.73549
EUR/USD=1.2075USD/EUR=0.8275
NGN/USD=0.0026USD/NGN=380.7000
GHS/USD=0.1701USD/GHS=5.8468
ZAR/USD=0.0656USD/ZAR=15.2200
KES/USD=0.0090USD/KES=109.135
BTC/USD=36,208.0000USD/BTC=0.0000
ETH/USD=955.0000USD/ETH=0.0009
JPY/USD=0.0100USD/JPY=103.8600
CNH/USD=0.1541USD/CNH=6.4831
AUD/USD=0.7701USD/AUD=1.2980
Source: OANDA

The Africa Play …

This morning I decided to take a look at how the U.S. dollar is faring this week against the Ghanaian, Nigerian, and Kenyan currencies in comparison to the Swiss franc, Chinese yuan (offshore), and the British pound. In my opinion the United States hasn’t demonstrated that it wants to be a significant trading partner with the African continent, but with a new administration and China’s well documented economic forays on the Continent, that may change.

Pairs4 January 20215 January 20216 January 20217 January 2021Notes
CNH/KES16.787916.840516.837316.8373.3% increase in exchange rate
USD/KES108.391108.461108.500108.500.1% increase in exchange rate
GBP/KES147.768147.472147.723147.723Flat
CHF/KES122.931123.285123.497123.497.5% increase in exchange rate
Source: OANDA
Pairs4 January 20215 January 20216 January 20217 January 2021Notes
CNH/NGN59.620659.264058.808258.80821.3% decrease in exchange rate
USD/NGN384.938381.690378.964378.9641.5% decrease in exchange rate
GBP/NGN524.784518.974515.960515.9601.7% decrease in exchange rate
CHF/NGN436.578433.856431.344431.3441.2% decrease in exchange rate
Source: OANDA
Pairs4 January 20215 January 20216 January 20217 January 2021Notes
CNH/GHS0.90640.90940.90740.90740Flat
USD/GHS5.85245.85695.84735.84735Flat
GBP/GHS7.97857.96357.96127.96118.2% decrease in exchange rate
CHF/GHS6.63756.65746.65566.65558.3% increase in exchange rate
Source: OANDA

US waits for Senate election results from Georgia; strength of US dollar against European, African currencies a mixed bag …

PairsOANDA as of 4 January 2021OANDA as of 6 January 2021Notes
USD/KES108.391108.461Dollar flat
USD/NGN384.938381.690Dollar weakening
USD/GHS5.85245.85693Dollar flat
USD/CDF1950.611950.01Dollar flat
USD/AOA648.310649.149Dollar flat
USD/ZAR14.630914.8552Dollar strengthening
Source: OANDA

Meanwhile, as the count in Georgia comes to a close, yields on longer term notes begin to increase as the Senate gets closer to a 50-50 split and the likelihood of more spending under a Biden administration ….

RatesFederal Reserve as of 4 January 2021Bloomberg as of 6 January 2021 10:30 am AST
Federal Funds Rate0.090.08
Prime Rate3.253.25
3-month Treasury0.090.08
2-year Treasury0.110.13
10-year Treasury0.931.02
30-year Treasury1.661.78
Source: Federal Reserve, OANDA

And the buzz phrase again mid-week is dollar weakening as exchange rates for a number of foreign exchange pairs continues to fall. This in light of disappointing jobs numbers from ADP where the payroll company determined that 123,000 jobs were lost in December 2020.

PairsFederal Reserve as of 4 January 2021OANDA as of 4 January 2021OANDA as of 6 January 2021 10:45 am AST
GBP/USD1.36621.36331.35967
USD/CAD1.27531.27261.27269
USD/CNH6.52506.45526.43929
USD/DKK6.08396.06576.05823
EUR/USD1.22301.22641.22774
USD/INR73.010072.936773.0696
USD/MXN19.892019.838219.9091
USD/JPY103.1900103.02102.36
USD/NOK8.57578.53008.50760
USD/SEK8.20958.20918.20299
USD/CHF0.88410.88150.87959
Source: OANDA

As Africa embarks on a new trade bloc, time to take closer look at its currencies …

PairsOANDA as of 4 January 2021OANDA as of 5 January 2021Notes
USD/KES108.391108.391Dollar weakening
USD/NGN384.938384.938Dollar strengthening
USD/GHS5.85245.85238Dollar weakening
USD/CDF1950.611950.61Dollar flat
USD/AOA648.310648.310Dollar weakening
USD/ZAR14.630914.6309Dollar flat
Source: OANDA

Political/Regulatory/Legal News Impacting US-Africa Foreign Exchange Pairs

No information to share at this time

Foreign exchange rates in Bezos’ Africa play …

Last November, it was reported that Jeff Bezos, via his personal venture capital fund, would be investing in the Uganda-based financial technology firm Chipper Cash. In an effort to monitor the progress of capital flows into African countries within Chipper Cash’s footprint, we are beginning a series of blog posts documenting foreign exchange rates in these countries.

As of 8:24 am AST 4 December 2020, here are the exchange rates with Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa, and Kenya based on the U.S. dollar.

GHS/USD=0.17061 USD/GHS=5.82987

UGX/USD=0.00027 USD/UGX=3,668.06

NGN/USD=0.00262 USD/NGN=377.448

TZS/USD=0.00043 USD/TZS=2308.76

RWF/USD=0.00100 USD/RWF=974.557

ZAR/USD=0.06551 USD/ZAR=15.2518

KES/USD=0.00895 USD/KES=110.008

Source: OANDA

Legal/Political events impacting African currencies:

U.S. releases jobs report today

The U.S. Department of Labor today will release its jobs situation report which is expected to provide the U.S. and its trading partners with insights into the spending power of Americans. More individuals entering the labor market along with increases in wages should provide African nations trading with the U.S. a gauge on the capacity of the American consumer.

Price of the Eastern Caribbean Dollar …

How to read the chart:

XCD/USD: If you come to the United States with one Eastern Caribbean Dollar (XCD)and wish to sell it for a US dollar (USD), the market price is 0.37037 USD.

USD/XCD: If you take a US dollar (USD) to a participating Eastern Caribbean nation and wish to sell it for a Eastern Caribbean Dollar (XCD), the market price is 2.70 XCD.

As of 6:40 am AST this is the price of the Eastern Caribbean Dollar in various currencies:

XCD/USD=0.37037 USD/XCD=2.70

XCD/GBP=0.27581 GBP/XCD=3.62517

XCD/EUR=0.30526 EUR/XCD=3.27557

XCD/PLN=1.36501 PLN/XCD=0.73179

XCD/TRY=2.89327 TRY/XCD=0.34509

XCD/JPY=38.57 JPY/XCD=0.02592

XCD/XAF=200.284 XAF/XCD= 0.00499

XCD/TTD=2.46504 TTD/XCD=0.39101

XCD/BBD=0.74074 BBD/XCD=1.35000

XCD/JOD=0.26259 JOD/XCD=3.80818

XCD/CHN=2.42224 CHN/XCD=0.41276

Source: OANDA

Political/Legal Events impacting Eastern Caribbean Dollar:

U.S. awaits release of unemployment report

The U.S. Department of Labor is scheduled to release today its jobs situation report which will provide the U.S. and economies trading with the U.S. with insights into the American economy and its ability to consume exports.

Source: U.S. Department of Labor

As of 9:36 am AST 3 December 2020, Foreign exchange rates between U.S., select countries in East Africa, West Africa, the Caribbean, and Asia, and BitCoin; Federal Reserve sees increased bank delinquencies in 2021 …

As of 9:36 am AST, 3 December 2020:

How to read the chart:

CAD/USD: If you come to the United States with one Canadian dollar (CAD)and wish to sell it for a US dollar (USD), the market price is .77302 USD.

USD/CAD: If you take a US dollar (USD) to Canada and wish to sell it for a Canadian dollar (CAD), the market price is 1.29344 CAD

CAD/USD=0.77302   USD/CAD=1.29344

CNH/USD= 0.15265   USD/CNH=6.54972

EUR/USD= 1.20787   USD/EUR=0.82781

DKK/USD =0.16225   USD/DKK=6.16157

NGN/USD= 0.00262   USD/NGN=377.841

JPY/USD=0.00957   USD/JPY=104.50

INR/USD=0.01357      USD/INR=73.5849

JMD/USD=0.00678    USD/JMD=144.553

GYD/USD=0.00469       USD/GYD= 204.916

GHS/USD=0.17049     USD/GHS= 5.82649

XCD/USD=0.37037        USD/XCD= 2.70

KES/USD = 0.00897      USD/KES= 109.505

BBD/USD = 0.50000     USD/BBD = 2.0000

TTD/USD = .14488         USD/TTD= 6.65179

BTC/USD= 17444.40     USD/BTC= 0.00006

Source: OANDA

Major political/legal event impacting foreign exchange

Federal Reserve releases its Beige Book finding moderate, modest US expansion

Yesterday, the Board of Governors of the Federal Reserve System released its final Beige Book for 2020.  The Federal Reserve determined that US economic expansion is either moderate or modest at best.  A number of districts, including the Philadelphia district, have observed a slow down in growth with a spike in COVID-19 cases since early November.  Banks expect the number of borrower delinquencies to increase in 2021.  

Source: Board of Governors of the Federal Reserve System