This Wednesday morning, the Nigerian currency, Naira, stays at N1600 for 1 dollar in the black market. This is happening even though Nigeria’s foreign exchange market has seen some good changes, and the dollar is at a low point in the last seven months.
People who bet that the Naira will get weaker are not worried, even though the Nigerian government has introduced dollar bonds to add more dollars into the market. The NAFEX data showed that the Naira ended at N1579.74 for 1 dollar.
Even with better market conditions, the Naira is still struggling.
The Central Bank of Nigeria (CBN) said that money sent home by Nigerians living abroad increased by 130% in July 2024, reaching $553 million, compared to July 2023.
Forex traders say that one reason for the Naira’s struggle is that the CBN is not consistent in giving dollars to the Bureau De Change (BDC) operators, who help people exchange money.
U.S. Dollar Index Facing Pressure
The dollar’s value increased a bit in early European trading on Wednesday. This happened even though the U.S. Federal Reserve, which controls interest rates, is expected to lower them in September. The dollar remains close to its lowest point in the last seven months.
The dollar index has dropped over the past month because U.S. bond yields have hit their lowest point in more than a year. This has caused worries about a possible recession, helped by weaker-than-expected job reports.
Today, everyone is looking at the new job data expected later. If these numbers are lower than before, it could affect the dollar a lot.
Traders are also paying attention to whether the Federal Reserve will cut interest rates in their mid-September meeting and the minutes from their July meeting, which will be released later today.
The Federal Reserve has kept the benchmark interest rate between 5.25% and 5.50% for some time now. The U.S. economy still looks weak.
Experts say that changes in the economy, where investments go, and trading positions will likely keep pressing down on the dollar in the next months.
Today, the Bureau of Labor Statistics will share updated job growth numbers through March 2024, based on more accurate information.
Some estimates suggest that the number of jobs added could be revised down by 500,000 to 1,000,000.
Later today, the Federal Reserve will release the minutes from their meeting on July 31. People expect to learn that the Fed is starting to worry less about inflation and more about job growth.
The selling of the dollar index (DXY) is getting stronger as traders expect a big new trend in the market. We will see how it does around the 101.00 mark.