The Naira broke the key resistance line at the black market while the greenback sank to a 3-year low in the global foreign exchange market.
The Nigerian currency settled at N1,590/$ during the mid-week trading session at the unofficial market, up from N1,595-N1,600/$ on Tuesday.
The local currency strengthened to N1,549/$ in the Nigerian Foreign Exchange Market (NFEM).
CBN data Nigeria showed the naira marginally strengthened from N1,550/$ to N1,549/$ at the official market.
Supportive FX interventions by CBN, with macroeconomic policy changes and foreign capital inflow policies, will likely keep the naira’s exchange rate at these levels for the midterm. Improved sentiment, driven by economic reform programs, has been noted to boost foreign investors’ confidence and perception of the Nigerian capital market
The greenback sinks to a 3-year low
US President Donald Trump continued to call for lower interest rates and criticized Federal Reserve Chair Jerome Powell, which caused the dollar to plunge to levels not seen in many years.
The markets also reacted to speculation that the Fed might cut rates as early as July, and a Wall Street Journal report that Trump was considering appointing Powell’s successor sooner than usual further hurt the dollar.
Investors are fleeing the haven currency, as evidenced by the dollar index falling to record lows against six major currencies. The index is down 10 percent this year after Trump’s proposed tariffs disturbed investor confidence in US growth.
Powell remains relatively unconcerned after his testimony on short-term inflation increases, while financial markets continue to deal with Trump’s trade policy turmoil ahead of the July 9 trade deal deadline.
The U.S Fed Chief warned of real threats of persistent inflation and cautioned against excessive interest rate cuts moving forward.
Economists still anticipate rate cuts later this year despite lowered expectations for economic growth due to increased import tariffs. However, decisions will likely be delayed until clarity around tariff proposals and trade deadlines is achieved.
“Impact of tariffs on inflation remains uncertain, and will keep central banks, especially the Federal Reserve, in a conservative stance,” Bank of America strategists noted, emphasizing downside risks.
U.S. Treasury Secretary Scott Bessent announced that the “debt issuance suspension period,” which was set to end on Friday, would be extended. According to the declaration, the Treasury may halt payments from government pension and retiree healthcare funds that are not immediately required to cover benefits
Scott Bessent indicated that unless the debt ceiling is raised or suspended sometime in the middle to late summer, the Treasury would be unable to meet its obligations. Currently, traders are awaiting the Federal Reserve’s preferred indicator, the PCE inflation index, set for Friday.
The global financial market has recently been underwhelmed by US economic data, with consistent outperformance of European data compared to market expectations, which is supporting the euro and pushing the dollar lower.
Appetite for the haven currency moderated amid the Israel-Iran truce. A ceasefire between Iran and Israel, mediated by the United States, appeared to hold, and regional risk sentiment was positive. Trump also hinted at scheduled nuclear negotiations with Iran next week
