The naira traded around the N1,600/$ mark on Tuesday in the unofficial market and depreciated to N1,550/$ in the Nigerian Foreign Exchange Market (NFEM).
CBN data showed the Nigerian currency weakened to N1,550/$ from N1,547/$ last Friday.
The Naira’s fundamental outlook sharply blurred when oil prices fell below $70 a barrel, amid tension easing in the Middle East.
Crude oil is Nigeria’s main source of foreign exchange (FX) earnings.
President Trump announced that a complete ceasefire between Israel and Iran would take effect, possibly ending the conflict between the two nations. White House officials said Israel would only hold up its side of the ceasefire if Iran remains peaceful, and Iran has indicated compliance.
The regional geopolitical tensions in the Mediterranean continue to undermine oil-dependent currencies like the Nigerian naira. Nigeria, Africa’s leading oil producer, heavily relies on oil to boost FX inflows and fiscal revenues.
However, the CBN conducted an OMO auction to tame liquidity in the country’s monetary space, offering a certain amount across 155-day and 204-day tenors, which strongly influenced total subscriptions, worth N1.14 trillion.
The CBN ultimately allotted N1.07 trillion, with stop rates of 24.2% and 24.6%.
U.S dollar index dips in global market
The US Dollar Index declined to 98.25 following President Trump’s announcement of the Israel-Iran ceasefire.
Trump’s presidency has often been marked by increasing discord over Iran relations; however, he brokered a ceasefire in intra-Israel hostilities for some time. Reports of explosions near Tel Aviv and Beersheba, in southern Israel, have emerged.
- These reports mention missile launches from the area and highlight a ‘tempest’ around Iran, due to decades of lax international oversight. Several individuals involved were killed without any direct link to hostilities between the countries.
Additionally, the Pentagon released information that indicated President Donald Trump had already settled the issue, outlining conditions including no further airstrikes on strategic zones by Iran. “As long as everything goes according to plan, which it will, then I want to congratulate both countries, Israel and Iran, for having the stamina, courage, and intelligence to finish what ought to be dubbed the ’THE 12 DAY WAR,’” he posted on his account in Truth Social.
- An Iranian official confirmed that Tehran accepted a ceasefire; however, the country’s foreign minister reiterated that there would be no ceasefire without an end to Israeli hostilities. Reports from SNN on Tuesday indicated that Iran fired its last missile barrage before the peace deal took effect.
- Israel, supported by the US over the weekend, launched strikes on Iran’s nuclear infrastructure amid accusations that Iran was nearing nuclear weapon capability. Iran denies ever having an active nuclear weapons program, but Supreme Leader Ali Khamenei has said that if they ever sought such capabilities, “we wouldn’t be able to stop ourselves.”
Qatar’s Prime Minister, Sheikh Mohammed bin Abdulrahman Al Thani, secured an agreement from Tehran during talks with an Iranian official.
Vice President JD Vance, Secretary of State Marco Rubio, and the US Middle East special envoy Witkoff reportedly made contact, direct or indirect, with Iranians, thereby giving the markets a sense of relief.
Investors await U.S Fed chief’s Speech
Investors await Chair Powell’s semiannual testimonies and the upcoming June Consumer Confidence report on Tuesday.
- Dovish remarks from US Federal Reserve officials contribute to the weakening of the dollar.
- The market has significantly reexamined the trajectory of U.S. interest rates due to the decline in oil prices and remarks made by several Fed officials. By the Fed’s next meeting on July 29–30, inflation pressures look contained, which will probably support a rate cut.
Christopher J.Waller, a Fed member, had suggested lowering interest rates by the end of July. However, according to CME’s FedWatch tracking tool, most analysts still anticipate that the monetary institution will only lower rates in September.
