The Nigerian naira strengthened against the American dollar on Monday in both the official and parallel foreign exchange markets, signalling a favourable start to the week.
According to CBN data, Naira rose N5.16 from Friday’s rate of N1,457.95/$.
This posted a 0.35 per cent increase, maintaining the upward trend from the past week.
The Association of Bureau De Change Operators of Nigeria (ABCON) commended the Naira for its month-long strengthening in both official and unofficial markets.
ABCON President Dr. Aminu Gwadabe told the News Agency of Nigeria (NAN) in Lagos that different factors contributed to the gains. Nigeria was taken off the Financial Action Task Force’s (FATF) “grey list,” and its oil earnings, foreign reserves, and diaspora remittances all increased.
Gwadabe praised the nation for being eliminated and noted that the Naira had gained N10 against the dollar at the parallel market.
Greenback falls ahead of Wednesday Fed Meeting
The greenback declined on Tuesday ahead of a series of central bank meetings expected to lead to a rate cut in the United States. Meanwhile, investors watched President Donald Trump’s tour of Asia cautiously in anticipation of a trade agreement with China. The value of the yen increased by more than 0.6% to 152.
- The dollar is also ahead of this week’s Bank of Japan meeting, where the central bank is expected to keep interest rates steady. However, attention will focus on whether the meeting hints at when the next rate hike might happen.
- Investors also considered Trump’s meeting with Sanae Takaichi, Japan’s new prime minister, on Tuesday in Tokyo, where he signed agreements on rare earths and trade and praised her promise to hasten military buildup.
- The focus will be on the meeting between Chinese President Xi Jinping and President Trump in South Korea on Thursday.
The U.S dollar index, which compares the haven currency to six other currencies, eased 0.19 percent to 98.58 after falling 0.15 percent in the previous session. Markets will closely watch for any signs that the Fed is preparing to end its quantitative tightening program, as a rate cut is already expected.
The Fed and Chair Jerome Powell’s ability to clarify future rate moves is important, especially as the US government shutdown continues, depriving decision-makers of economic data. Traders project another rate cut in December.
The Fed is expected to cut interest rates by an additional quarter point at its October meeting on Wednesday, bringing the benchmark rate to 3.75-4 percent.
According to the CME FedWatch tool, markets currently assign a nearly 97 percent chance of a quarter percentage point rate reduction at the October meeting. Fed officials are debating the impact of the government shutdown.
- Policymakers are considering whether to lower rates quickly to support a weakening labor market or to keep rates steady because of the inflation remaining persistently above the Fed’s 2 per cent target.
- Attention will turn to the press conference after the rate decision. The US dollar could weaken against its rivals if Fed Chair Jerome Powell makes any dovish comments.
Negotiations on trade issues such as export restrictions, fentanyl trafficking, agricultural trade, and shipping levies have led to a preliminary agreement between the US and China, according to US Treasury Secretary Scott Bessent on Sunday. This progress was made possible by ongoing talks.
