The Nigerian Naira posted its biggest one-day gain against the dollar in 2025 at the official foreign exchange market on Thursday, ahead of Friday’s public holiday to commemorate Eid-ul-Mawlid, the birth of the Holy Prophet Muhammad.
The local currency strengthened below the N1550/$ bandwidth at the official and parallel market, while the greenback posted further declines in the global foreign exchange market.
CBN’s data showed Naira’s value increased sharply to N1,514.87/$ on Thursday from N1,521.46/$ on Wednesday.
The Nigerian naira’s value traded below N1,540/$ on Saturday at the unofficial market. Currency reforms and other CBN policies also led to improved foreign investment inflows and increased interventions in the domestic foreign exchange market.
The country’s investment outlook improved because of the unification of exchange rates and the resolution of the $7 billion foreign exchange backlog; multilateral organizations such as the World Bank called this a daring intervention.
According to Standard Bank’s updated medium-term outlook, the naira will depreciate by 3.1 percent versus the US dollar in 2025, although at a stronger rate than previously predicted.
The bank has revised its forecast to N1,585.5/$1 after previously predicting that the naira would close 2025 at N1,697.5/$1.
The revision was justified by stating that it was based on new data from Nigeria’s foreign exchange market and more general macroeconomic patterns that suggest the currency is headed toward greater stability.
“We now revise our medium-term outlook on the USD/NGN pair, considering some fresh data and the evolution of events over the past month. We now anticipate that the NGN will depreciate by a moderate 32.1 percent versus the USD in 2025, ending this year at N1,585.5 (previous forecast: N1,697.5) and settling at N1,692.6 by December 2026. The bank also said that there is a greater chance that the currency will range higher, rather than lower, over the forecast horizon.” ,The bank added.
The greenback fell to a five-week low, as investors anticipated a barrage of US labor market data this week that could influence expectations for the Federal Reserve’s monetary easing path.
Traders locked in a rate cut by the Federal Reserve this month following data showing the US labor market was weakening, which caused the dollar to decline.
Weak U.S. job Report hurts the greenback
The US dollar quickly sheds Thursday’s gain and returns to its downward trajectory as investors seem increasingly certain that the Federal Reserve (Fed) will lower interest rates at the September 16–17 meeting.
Foreign exchange traders’ bets for additional Fed easing were, in fact, strengthened as US Nonfarm Payrolls revealed that the economy added only 22,000 jobs last month, falling short of projections of 75,000 jobs and less than July’s 79K jobs gain.
The Bloomberg Dollar Spot Index pared losses and ended Friday lower after plunging as much as 0.7 percent. The gauge has lost over 8% of its value so far this year in comparison to a basket of international peers.
Market participants have been betting on the dollar’s continued decline. In the week leading up to September 2, the Commodity Futures Trading Commission reported that hedge funds and other speculative investors had placed about $5 billion in bearish bets against the global reserve currency. Two of the top performers in the Group of 10 were the New Zealand dollar and the Swiss franc.
The Canadian Loonie fell behind its peers after data showed Canada unexpectedly lost jobs for a second consecutive month, raising the possibility of a rate cut by the Bank of Canada this month. Further signs of a weakening labor market are expected to support analysts’ arguments that the US economy is no longer outperforming as it did for most of the previous decade, which had supported a weaker U.S. dollar.
The OPEC+ meeting on September 7 is a key event for currency traders, as it is expected that eight members, including Saudi Arabia and Russia, will continue their voluntary production cuts.
