On the first day of trading this week, our money, the naira, became stronger in the official market, even though the U.S. dollar was very strong against other big currencies on Tuesday.
Based on details from the FMDQ Securities Exchange Limited, our naira went up by 5.7% after Monday’s trade. This means that on Monday, you needed N1,552.92 to get one dollar, but on Friday, it was much more expensive at N1,641.27 for one dollar.
There was, however, less trading happening, with a turnover drop by 44.27%. On Monday, the trading was worth $343.71 million, but last Friday, it was worth $616.73 million.
By the end of the day on Monday, the price of a dollar went higher to N1,682 compared to last Friday’s N1,675. The lowest dollar price on Monday was N1,540, which was better than the last week’s low of N1,591.
The naira has been getting weaker over the year, which led to things becoming more expensive, less buying power, and some worry about the economy. Even though we are not making that much oil, some good changes have happened, like Nigeria’s finance minister introducing a plan where oil is priced in naira.
But, OPEC says Nigeria’s oil production fell to 1.324 million barrels each day last month. The government planned for 1.78 million barrels each day, meaning they might need to borrow more money and manage their budget better, which can put pressure on the naira.
U.S. Dollar Index Almost at its Highest in Two Months
The dollar index shows how strong the U.S. dollar is against six other important currencies. On Monday, it was at 103.27, close to its highest since August 8, which was 103.36. The dollar is doing well and is predicted to stop its three-month losing streak, going up by 2.5%.
The dollar got stronger when Fed Governor Christopher Waller suggested being “more cautious” on reducing interest rates according to the latest economic signs. He said he’s still planning to slowly reduce the rate over the next year.
Before the European Central Bank’s meeting on Thursday, where they are likely to announce another rate cut, the euro was not doing well and was close to its weakest since August 8. The U.S., which is the world’s biggest economy, was doing okay with only small slowdowns. In September, prices went up slightly more than expected, leading traders to think there might not be significant rate cuts from the Fed.
The U.S. central bank started to lower interest rates in September with a big 50 basis points cut, but people now expect smaller cuts. This makes the dollar stronger. People trading money think there’s an 89% chance of a smaller 25-basis points cut in November and about 45 basis points of total cuts this year.