The U.S dollar dropped on Monday morning at London’s trading session, as global investors and currency traders got more optimistic about the global economic recovery from COVID-19 picking up leading investors to short (sell) the safe-haven asset even as the caseloads of COVID-19 keep increasing.
The U.S. Dollar Index that tracks the American dollar against a bouquet of other major currencies (like the Japanese yen, British pound sterling, Swedish Krona, Euro), dropped lower to about 0.34% to trade at 98.275 after global investors retreated from the safe-haven asset.
What it means for Nigerians: Nigerians hoping to meet foreign exchange payment obligations, via dollar transactions to countries like Europe, and Japan, will need to pay more dollars to fulfill such transactions.
“Market participants believe that the worst of the health and financial and economic crises are now behind us. That’s supportive of commodity prices…and if we’re past the worst of it, then commodity currencies tend to do well and the U.S. dollar tends to do poorly in the early stages of a recovery,” Commonwealth Bank of Australia, FX analyst Joe Capurso told CNBC.
Meanwhile, U.S. President Donald Trump did not distort one of its trade deal with it arch-rival China when he laid out his reactions towards China’s national security law for Hong Kong and Macau on Friday.
“It’s tough to be a bear at the moment and the path of least resistance for risk remains to the upside in my opinion. We’ve moved past Trump’s China speech without the market hearing anything that will upset China too greatly and promote an immediate reaction,” Chris Weston, head of research at Melbourne brokerage Pepperstone, told CNBC.