The Naira opened at about N1,838 to the British pound on Wednesday, with currency traders closely watching developments in global markets ahead of fresh United States inflation data.
The latest rate represents a slight movement from the previous level of N1,839 to the pound, as sterling maintains strength in international trading despite facing resistance around the $1.3665 level against the dollar.
The News Chronicle reports that the naira has continued to receive support from the Central Bank of Nigeria’s monetary and foreign exchange policies, with relatively high domestic yields helping attract foreign investors into naira-denominated instruments.
Improved foreign exchange liquidity has also helped narrow the gap between the official and parallel markets, reducing opportunities for speculation and arbitrage.
Now people are turning their attention to the United States, where approaching inflation statistics could affect predictions about the Federal Reserve’s interest rate decisions.
Therefore, weaker indications of inflation and a slowing of the US economy may reinforce projections of rate reductions, hence supporting the pound and so exerting pressure on the dollar.
But still important issues for currency traders are geopolitical events, especially Middle East tensions and crude oil prices.
Still very important for Nigeria are changes in world oil prices since increased crude revenues might help the naira by boosting dollar inflows and offer more support.
