The Nigerian currency at the unofficial market maintained its face value at the second trading session of the week.
Currency traders bought the U.S. dollar for N1640/$ and sold at N1650/$ on the black market.
The CBN announced the Nigeria Foreign Exchange Code on Monday amid ongoing reforms in Nigeria’s foreign exchange market.
The apex bank claims that after several beneficial changes to the nation’s financial environment, the FX Code was required to reduce risks.
“The Nigerian financial landscape has undergone a considerable and positive transformation,” the country’s central bank stated, pointing out that the Code is based on the Global FX Code’s principles and best practices adopted in leading jurisdictions.
However, there are some obvious risks. In reaction to these developments, the FX Code established guidelines to promote the integrity and efficient operation of Nigeria’s wholesale foreign exchange (FX) market. It will support improved market performance and strengthen Nigeria’s flexible exchange rate system.
In addition, the Nigerian naira fundamentals brightened up amid the Dangote refinery input cutting back on oil imports and an uptick in Nigeria’s oil production.
Nigeria produced 1.5 million barrels per day on average last month, an improvement from past months.
PwC noted that some of the reasons FX pressure was easing in Nigeria’s FX market included more easily accessible information for investors and businesses, it was determined that one of the causes of the recent calm was the implementation of the Electronic Foreign Exchange Market System (EFEMS).
Additionally, it is anticipated that the newly introduced FX code by the CBN will improve authorized dealers’ operations and increase market transparency in Nigeria.
President Trump’s Tarriff threats strengthen the U.S dollar
The US Dollar Index, which measures the greenback’s strength against a basket of six major currencies, ended its three-day losing streak Tuesday during Asian trading hours by drifting higher to around 107.9 index points. President Donald Trump’s recent tariff threats give the USD some general support.
- Trump announced late Monday that he would impose tariffs on imported steel, computer chips, and medications to shift production to the US which triggered buying pressure in the haven currency.
- This move followed Trump’s weekend tariffs on Colombia, which shocked markets despite his decision to reverse the action after the South American country agreed to take military planes transporting deported migrants.
- Trump also threatened to impose taxes on China and the EU and a 25 percent tariff on imports from Canada and Mexico. Investors will keep a careful eye on developments about trade partner tariff policies.
- Monetary policymakers in the world’s largest economy are expected to maintain the benchmark interest rate in the current range.
The US Federal Reserve’s (Fed) interest rate decision will be the main focus on Wednesday.
Analysts anticipated that the US central bank would lower interest rates once more; however, given the potential for inflation caused by immigration and tariff policies, any additional rate cuts were questioned.
Investors watch the press conference for clues regarding the Fed’s outlook for interest rates. While a dovish stance could push the USD lower against its competitors, a hawkish stance could boost the currency.
