The naira was on the rise during mid-week trading in the official market.
The local currency maintained its upward trend, closing at N1,500.91 against the American dollar on the Nigerian Foreign Exchange Market.
This was the highest level ever recorded since March 5 on the Nigerian foreign exchange market.
The local currency dropped below the N1,500/$ threshold in its trading sessions for the second time this week, marking a significant milestone in the Nigerian official market this year.
The Nigerian naira fluctuated between N1,498/$ – N1,507/$ bandwidth during the mid-week trading session, showing a strong recovery in the naira.
The domestic currency strengthened to N1,506/$ on Monday and maintained that level through Tuesday before improving further in the middle of the week.
The Nigerian currency, however, traded marginally lower at the unofficial market, settling at the N1510/$-1512/$ bandwidth.
The naira’s steady rise aligns with a vital period of continued confidence in Nigeria’s economic reforms. The CBN led efforts to restore stability in Nigeria’s foreign exchange market by implementing various monetary policy reforms, such as actions to stabilize exchange rates, reduce speculative trading, and attract foreign investment.
This move has reflected some positivity in Nigerian companies’ earnings listed in the stock market as businesses increasingly utilize the local currency and manage import costs more effectively. The naira’s recent recovery offers cautious hope that ongoing stability in the naira might eventually ease inflationary pressures linked to import-dependent consumption.
U.S dollar steady in global market
The US Dollar Index (DXY), which measures the greenback’s strength against six major currencies, traded flat at 97.85 during the London session. The US Consumer Price Index (CPI) for August is expected to give traders new momentum later on Thursday.
The DXY may be affected by the US Federal Reserve’s (Fed) anticipated rate cut next week, which was reinforced by an unexpected drop in the US Producer Price Index (PPI). According to data released by the US Bureau of Labor Statistics (BLS) on Wednesday, the US PPI decreased by 0 points per month (MoM) in August, instead of rising by 0.7 percent (revised from 0.9 percent) in the previous reading.
This was below the market’s consensus increase of 0.3 percent. In August, the US PPI rose by 2.6 percent annually, compared to a 3.3 percent increase in July. However, in August, the core PPI excluding food and energy dropped by 0.1 percent month-over-month. The core PPI missed analysts’ estimates and increased by 2 points annually after rising 3 points in July.
Now that Fed easing is almost certain, markets are betting on it; the only thing uncertain is the size of the cut. Investors estimate an 8.9 percent probability of a 50-basis point cut at the central bank’s September 16-17 meeting, while a cut of at least 25 basis points is seen as a given, according to the CME Group’s Fed Watch tool.
President Donald Trump’s administration appealed a court decision that temporarily blocked his historic attempt to fire Federal Reserve Governor Lisa Cook, raising questions about his appointments to the Fed’s rate-setting committee.
The White House is trying to have her removed before next week’s central bank meeting.
The prospect of Stephen Miran being nominated as Fed governor has also increased, supporting Trump’s efforts to gain more direct control over interest rate policy. Additionally, Stephen Miran is nearing a nomination for Fed governor, reinforcing Trump’s attempts to influence U.S. rate decisions.
The American Senate Banking Committee voted to proceed with his nomination.
The Euro edged higher ahead of the European Central Bank’s policy meeting later today, where it is broadly expected that interest rates will remain unchanged. Analysts suggest policymakers could adopt a more accommodative stance to counteract the tense political and trade climate on the continent.
The European currency is stabilizing after falling for two consecutive days amid ongoing geopolitical tensions on the bloc’s eastern border
Poland announced it shot down suspicious Russian drones in its airspace on Wednesday with support from aircraft delivered by its NATO allies. This marks the first time a Western alliance member has done so since Russia’s war in Ukraine began.
