Naira experiences first weekly fall at unofficial market in 6 weeks

By Ken Ibenne

The unofficial market saw the naira hold above the N1200/$ band, which caused the Nigerian currency to halt its weekly winning streak vs the US dollar.

The naira’s runaway rise since late March, which had made it the world’s best-performing currency, ended on Sunday when it had its first weekly fall on the parallel market in several weeks.

The US dollar went for N1,207 on the black market on Sunday, down 15% from N1,050/$ at its peak last Monday.

Although the naira has recovered some of its losses after falling as low as N1236/$, recent market fundamentals show an increase in demand for the dollar. However, more momentum is needed to breach below N1200/$ once more.

In addition, the naira dropped 1.38 percent against the dollar on Friday in the official market, from N1,154.08 on April 18 to N1,169.99 on Friday.

Vice President Kashim Shettima is confident that the value of the naira would continue to rise in relation to the safe haven currency.

Shettima stated his opinion that the naira’s comparatively bullish run will not end anytime soon. “When Naira went crazy, some people celebrated, but we were secretly laughing at them because we knew we had the power to turn the tide,” he remarked.

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The dollar held its strong position relative to other major currencies, despite concerns about higher-for-longer interest rates.

By giving regional currencies some respite, foreign exchange dealers assuage concerns about rising tensions in the Middle East as risk appetite improves.

Nonetheless, as traders progressively took into account the chance that the Federal Reserve will cut interest rates as early as June, the majority of the major currencies were able to retain the majority of their losses from the previous week.

We anticipate more rate indications this week, and the currency is still stable.

The dollar index and dollar index futures were both slightly lower in Monday’s Asian trading, but they were still close to their higher five-month highs from earlier in April.

Particularly after strong U.S. inflation data and hawkish comments from senior Fed members, the dollar strengthened as expectations of a June rate drop faded.

This week’s discussion will center on more clues about US monetary policy, specifically from the PCE price index, which is the Fed’s preferred measure of inflation. Anticipated for release on Friday, the report is expected to corroborate the notion that U.S. inflation remained elevated in March.

More indicators of the state of the American economy will also be released in the next few days. The purchasing managers index data for April is anticipated to reveal more details regarding business activity.

The Japanese yen exhibited some steadiness and kept trading well over the 154 level even with the dollar’s limited support.

Investors were wary of any potential government as a result. This made investors cautious about potential government involvement, particularly when the USDJPY pair touched 34-year highs around 155.