Despite a monthly drop in the dollar index, the value of the Nigerian Naira ended the month lower.
The naira registered a monthly loss of over five percent versus the haven currency, according to data from the FMDQ. On Friday, it settled at N1,485.99 against the US dollar, down from the N1,402.67/$ price at the start of the month.
Daily trading saw the local currency close unchanged at 0.08 percent while the dollar traded at N1,485.99 on Friday from N1,484.75 quoted at NAFEM on Thursday.
The naira has been under extreme pressure in the nation’s precarious foreign exchange market even with increased liquidity and the apex bank’s attempts to impose various restrictions on BDC activities, including street trading, overseas outward transfers, and banning the use of the local currency on virtual P2P trading platforms.
The total dollar amount that willing sellers and purchasers offered in May was $4.60 billion.
The intraday high closed the month at N1,550 per dollar, up from N1,445 at the beginning, according to FMDQ’s daily market summary. Unlike the initial quote at the beginning of the month, which was N1,299.42 per dollar, the intraday low ended at a stronger N1,174.88/$1.
The Dollar Index had its first monthly loss in 2024
As expected, U.S. inflation rose in April, casting doubt on the timing of the Federal Reserve’s ability to cut interest rates. On Friday, the dollar dropped, marking 2024’s first monthly decrease.
The price index for personal consumption expenditures (PCEs) increased by 0.3% in March, according to a report released on Friday by the Commerce Department’s Bureau of Economic Analysis. This increase was consistent with the unrevised gain from the previous month.
In an effort to reduce demand in the biggest economy in the world, the Fed has raised borrowing costs by 525 basis points since March 2022. The financial markets had expected the first rate drop to happen in March, but it was delayed to June and is now set for September.
Official data issued on Thursday showed that the previous estimate of 1.6% annualised growth for the U.S. economy from January through March was lowered down to 1.3% due to lower revisions to consumer spending.
Treasury yields decreased following April’s indications that U.S. inflation was stabilising, which some interpreted as a sign that the Fed would still choose to cut rates later in the year.
The yield on the 30-year bond fell by 3.4 basis points to 4.6511% from 4.685%, while the yield on the benchmark 10-year U.S. note dropped by 5.1 basis points to 4.503% late on Thursday from 4.554%.
The yield on the 2-year note, which typically tracks interest rate projections, fell 5.2 basis points from 4.929% to 4.8768% late on Thursday.
