On the black market, the Nigerian naira started Tuesday’s trading session at N1,510 to the US dollar due to the weakness of the dollar index.
However, the Nigerian Foreign Exchange Market saw a greater settlement for the native currency.
The CBN reported that the indicative exchange rate of the naira fell from N1,500 to the dollar last Friday to finish at N1,499 to the dollar during Monday’s trading session.
The loss came after three days of gratitude the week before. Despite continuous reforms by the Nigerian apex bank, the naira has stayed relatively steady about the dollar, and the foreign currency market has become more open.
Furthermore, during the week’s worst trading session, the Nigerian naira depreciated on the official market, ending the day at N1,498.98 to the US dollar.Â
According to CBN data, the local currency fell by N6.49 compared to Friday’s settlement rate. This represents a 0.43 percent decline from Friday’s closing price of N1,492.49/$.
The head of the CBN has underlined time and time again how important it is for the naira to remain stable and how the central bank will continue to intervene in the foreign exchange market while promoting transparency.
Market efficiency has grown since the Nigerian Foreign Exchange Market FX Code and the Electronic Foreign Exchange Matching System were recently implemented. The Nigerian foreign currency market now has more liquidity thanks to these measures, which have reduced speculation and volatility.
Heightened geopolitical threats and a surprising drop in U.S. consumer spending hurt the dollar index.
Following the abrupt cancellation of their planned press conference, President Donald Trump and Ukrainian President Volodymyr Zelensky engaged in a heated debate that scared investors. A rush to safe-haven assets followed Trump’s harsh warning, “You are gambling on World War III, but you don’t have any cards in right now.”
Global Currencies Shake Amid Uncertainty
In February, the dollar index closed with a loss of about 1 percent, the largest monthly decrease since September. The index struggled to keep stable following weeks of volatile trading, a sign of shifting market sentiment.
- The language of President Trump increased the level of uncertainty. Diplomatic tensions between the U.S. and Ukraine, particularly when a proposed accord on rare earth materials fell through, put more pressure on the dollar.
- Given China’s dominance in manufacturing rare earths, the delay begs the issue of how it might respond. In reaction to tariffs, China might target American agricultural products, reigniting concerns of a new trade war. Any increase might raise the volatility of the currency and disturb global trade balances.
- Following the implementation of Trump’s trade tariffs, the dollar index, which measures the dollar’s strength relative to six major currencies, fell 13 basis points on Tuesday.
When Europe woke up to fresh U.S. tariffs on China, Canada, and Mexico, Donald Trump’s threat to impose taxes on the EU became more apparent. Following a one-month stay of execution, Trump seems to have adopted a more assertive posture, saying that negotiations with his northern and southern neighbours had “no room left” to delay 25 percent taxes further.
The 10-year Treasury yield’s modest climb above 4.20 percent reflects shifting market expectations for interest rates.
Currency traders bet more on a rate cut in June, indicating that sustained strength is questionable, even if higher rates normally support the greenback. As policymakers are cautious despite mounting expectations for a policy change, traders keep a tight eye on the Fed’s rate-cutting pace.
