See Exchange Rate Tonight As Dollar Continues To Rise Against Naira

Dollar traded near three-month highs to major peers on Wednesday giving the naira little room to maneuver as forex traders pushed back bets for a first Federal Reserve interest rate cut following surprisingly hot U.S. inflation figures overnight.

The naira traded settled around N1,499/ from an all-time low of N1,534/$ on the official Nigerian Autonomous Foreign Exchange Market.

At the black market where residents who can’t access the official market are forced to obtain foreign currency, the naira traded stronger at N1,517 per dollar

The naira is facing strong headwinds as the availability of the greenback in local markets plummeted sharply, adding pressure on CBN to raise interest rates to attract foreign exchange inflows at its policy meeting scheduled to be held later this month.

 

See Exchange Rate Tonight As Dollar Continues To Rise Against Naira

 

The CBN at the start of the year has taken several monetary actions to improve investor confidence, pricing, and market dollar liquidity.

The CBN’s chief, Mr. Yemi Cardoso informed lawmakers that FPIs have already started to provide the economy with much-needed foreign cash because of the changes, revealing that more than $1 billion has been drawn into the market consequently.

The US Consumer Price Index (CPI) reported headline and core inflation figures for the monthly and annual benchmarks that were higher than anticipated.

The positive surprise is a cold shower for markets that were expecting deeper deflation and were solely concerned about a rate cut in March or June. Given these circumstances, even a rate cut in June is beginning to seem quite unlikely.

According to LSEG’s rate probability app, federal funds futures currently price in no rate cut in March and a lower than 50% chance of easing in May. This comes after the U.S. consumer price index (CPI) increased 3.1% from a year ago in January, compared with an estimated 2.9% rise.

The recent CPI report has indicated that the disinflationary path that investors had anticipated no longer reflects the real scenario.

March rate reductions are implausible, and as of right now, June rate cuts seem improbable as well. It’s now time for another push-and-pull readjustment in the US dollar, with the DXY moving to 105 and greater upside this time.

There is still one more CPI report, and the March decision is more than a month away. The US dollar strengthened, and the markets took a hit, but volatility is expected to persist.