The naira surged against the US dollar, reaching its highest point since its devaluation in January. Bolstered by growing confidence, the Nigerian currency strengthened for the fourth consecutive week, closing at N1,245 per dollar.
According to data from the Nigerian Autonomous Foreign Exchange Market (NAFEM), the naira closed at ₦1,251.05/$1 for the fourth consecutive trading day in April 2024 at the official window.
Under the leadership of Governor Olayemi Cardoso, the CBN has implemented various measures to enhance local dollar liquidity and devalue the naira.
Despite predictions by the Economist Intelligence Unit (EIU) that the naira would continue to depreciate, it has maintained its strength. The EIU forecasted a gradual stabilization of the Nigerian Naira around N2,000 per US dollar this year.
However, despite the CBN’s hawkish stance, current fundamentals suggest significant resistance for the Nigerian Naira, especially as the US dollar strengthens with positive economic data.
In an effort to stabilize the naira and curb rapidly rising inflation, the Nigerian Central Bank has settled all certified foreign exchange arrears.
To combat soaring inflation, the Nigerian Central Bank raised the benchmark interest rate to 24.75 percent this year, contributing to some stability.
Efforts are underway to clamp down on the unofficial market and virtual service providers exacerbating the naira’s depreciation by increasing demand for the USDT, pegged to the dollar.
Following better-than-expected nonfarm payrolls in March, the dollar index rose in London trade, reducing expectations of a Fed interest rate cut as early as June.
Forecasts for a rate hold rose to 46.8% from 39.6% last week, according to the CME Fedwatch tool, after markets scaled back expectations of a June rate cut.
Anticipation surrounds March’s consumer price index data and the release of the Fed’s March meeting minutes, providing insight after several officials suggested the bank was not rushing to cut interest rates.
Nigeria’s 2024 FG budget relies heavily on oil earnings. Markets are likely to assess OPEC’s upcoming report for insights into Nigeria’s oil production.
OPEC’s oil production decreased in March due to declining oil shipments from Iraq and Nigeria, along with continued voluntary supply limits, dropping from 50,000 barrels in February to 26.42 million barrels in March.
