Following Wednesday’s sell-off, the U.S. dollar index rebounded, causing the Nigerian currency to decline modestly on the official market.
On Wednesday, October 30, 2024, the value of the Naira fell somewhat against the US dollar at the official foreign exchange market.
According to the Nigerian Autonomous Foreign Exchange Market, the official window value of the local currency was N1,631.17/$1.
Nigeria’s high money supply and large government deficit budget have pressured the country’s foreign exchange.
According to CBN data, Nigeria’s money supply, or M3, increased 62.8 percent yearly from N66.94 trillion in September 2023 to N109 trillion in September 2024.
According to a statement released by the International Finance Corporation (IFC) on Monday, the CBN and IFC have inked an agreement to lower foreign exchange risks and expand local currency loans for Nigerian companies.
According to the statement, the World Bank Group member IFC plans to greatly expand its support in Nigeria, aiming to reach more than $1 billion in the upcoming years.
IFC will increase its naira investments in small and medium-sized enterprises, the creative sector, infrastructure, housing, agriculture, and energy while managing foreign exchange risks.
“IFC’s partnership with the central bank is a critical tool to expand access to this financing, as many of these sectors require financing in local currency,” the statement said.
US Dollar Displays Rebound In Thursday’s Trading Session
In reaction to various US data, the dollar index fell late yesterday before rising again.
Following Wednesday’s announcement of conflicting economic data, the US Dollar Index (DXY), which compares the value of the USD to a basket of six other currencies, declined. In October, the market responded to the September ADP Employment Change report, but the USD plunged after a negative revision to the third-quarter GDP growth.
With a 233K gain in October, the US ADP Employment Change above forecasts should lessen the dollar losses. With a 2.8% growth rate in Q3, the US GDP outperformed its overseas counterparts but fell short of market expectations.
Ahead of Friday’s Nonfarm Payrolls (NFP) report, which could provide more insight into the labour market’s fundamentals, investors are still on edge. The dollar index, which compares the value of the US dollar to a basket of international currencies, is up 0.15% at 104.02 after dropping below the 104-index point mark the day before.
The Euro and the British pound sterling, two of the basket currencies, are down about 0.2% at $1.0871 and $1.2953, respectively.
