The Nigerian currency slightly depreciated at the official market, as the U.S dollar index showed some recovery after Wednesday’s sell-off.
The Naira slightly declined in value with the US dollar on Wednesday, October 30, 2024, at the official foreign currency market.
The Nigerian Autonomous Foreign Exchange Market reported that the local currency was worth N1,631.17/$1 at the official window.
Nigeria’s foreign exchange has been under pressure amid high money supply, and high government deficit budget.
Nigeria’s money supply often known as M3, grew to N109 trillion in September 2024, according to CBN data, M3 grew 62.8 percent annually from N66.94 trillion in September 2023.
The CBN and the International Finance Corporation (IFC) have signed an agreement to reduce foreign exchange risks and increase local currency loans for Nigerian businesses, iFC said in a statement on Monday.
The IFC, a member of the World Bank Group, intends to significantly increase its funding in Nigeria, with a target of more than $1 billion over the coming years the statement said.
IFC will manage foreign exchange risks and expand its naira investments in small and medium-sized businesses, creative industry, infrastructure, housing, agriculture, and energy.
“Many of these sectors require financing in local currency, and IFC’s partnership with the central bank is a critical tool to expand access to this financing,” stated the statement.
The U.S. dollar shows recovery in Thursday’s trading session
The dollar index rebounded again after plummeting late yesterday in response to a mixed bag of US reports.
The US Dollar Index (DXY), which measures the value of the USD relative to a basket of six other currencies, fell after the release of contradictory economic data on Wednesday. The market reacted to the September ADP Employment Change report in October, but a negative revision to the third-quarter GDP growth sent the USD into a tailspin.
The US ADP Employment Change outperformed expectations in October with a 233K increase, which should reduce the dollar losses. The US Q3 GDP grew at a 2.8% rate, better than its global peers but less than the market had predicted.
Investors remain tense ahead of Friday’s Nonfarm Payrolls (NFP) report, which may shed further light on labor market fundamentals. After falling below, the 104-index point level the day before, the dollar index, which measures the US dollar against a basket of foreign currencies, is now up 0.15% at 104.02.
Two of the basket currencies, the Euro and British pound sterling, are down almost 0.2% at $1.0871 and $1.2953, respectively.