The American dollar dropped on Tuesday afternoon, owing to the strengthened global investors’ risk appetites as more countries cautiously ease lockdowns caused by the deadly COVID-19 virus.
The U.S. Dollar Index that tracks the American dollar against a basket of other major currencies (like the Japanese yen, British pound sterling, Swedish Krona, Euro), was down 0.64% to 99.252 by 12-noon Nigerian time on Tuesday, after global investors retreated from the safe-haven asset.
What it means: Nigerians hoping to meet foreign exchange payment obligations, via dollar transactions to countries like Europe, and Japan, would need to pay more dollars to fulfil such transactions.
But the U.S dollar upside was capped as global investors continued to track the U.S.-China relationship. Tensions between the two most powerful world economies flared up last week after China enacted national security laws for Hong Kong.
“Markets are caught between two conflicting currents,” Michael McCarthy, CMC Markets’ chief strategist, told Reuters.
“Rising tensions between China and the U.S. are raising concerns while easing COVID-19 lockdown measures are fueling growing optimism.” Michael McCarthy added.