The strength of the naira has brought a small break for Nigeria’s currency and its markets after a bad slump. On Wednesday, at the official trading spot, things got a bit better compared to before.
On Tuesday, the naira became a bit stronger against the mighty dollar. It was at N1561.76 for one dollar, better than the N1635 for one dollar just a day before, according to the Nigerian Autonomous Foreign Exchange Market.
This means the naira improved by N73.4 for each dollar in just one day in this market.
But in the unofficial market, the naira couldn’t get back to trading at N1650 for a dollar. It stayed at N1680 for a dollar on Tuesday. The Nigerian government has started selling oil and other goods in naira. They hope this will make the naira stronger.
Mr. Wale Edun, who manages the money for Nigeria, shared that selling oil products in naira began on October 1, 2024. This move was ordered by Nigeria’s big decision-making group, the Federal Executive Council.
“Key leaders confirmed this was happening after a meeting on October 3, 2024, to see how the Naira Oil Sale Plan was going,” the statement said.
Dollar Gaining Strength Again
This week, not much is happening with U.S. data, giving everyone a break after last week’s good jobs report, which made the dollar stronger and made people think the U.S. might not reduce interest rates soon.
Last week, the dollar did really well and went up the most it has in two years. Betting against the dollar seemed risky if other countries are keen on keeping their own currencies strong. The DXY index, which measures the dollar against other major currencies, went up more than 2% last week, surprising traders who thought the dollar would go down.
The report on jobs in the U.S. and thoughts about what the Federal Reserve might do with interest rates helped this boost. But even before that news, the dollar was already getting stronger.
Central banks in Europe and Japan signaled they will match any moves by the U.S. Fed if they make any big interest rate changes. The U.S. Fed started a big plan to lower rates last month, and other countries are keeping an eye on that.
Later on Wednesday, people will read what the Federal Reserve discussed in their meeting in September, including talks about jobs, which weren’t doing so well at that time. Most money leaders agreed to lower rates by 50 points.
Because of strong job numbers, people are now not so sure if the Fed will cut rates soon. They think there’s about an 85% chance of a small rate drop, and a slight chance that the Fed might keep things the same, according to the CME FedWatch tool.
Meanwhile, the British pound stayed pretty much the same at $1.3099, close to its lowest in over three weeks. The euro was down a little, too, at $1.0973.