The Nigerian naira saw a minor depreciation against the US dollar during the first trading session of the week, as the dollar displayed strength in the global market.
According to Central Bank of Nigeria (CBN) data, the naira slipped by N1.68/$ (0.1%) to settle at N1,535.9/$, compared to N1,534.29/$ at the previous market close. However, the domestic currency saw a gain against other major currencies. It appreciated by 20 Kobo against the Pound Sterling, closing at N2,060/£1, slightly up from N2,060.34/£1 in the previous session. Against the Euro, the naira also appreciated by N3.85, trading at N1,782.75/€, up from N1,786.6/€.
In the black market, the exchange rate remained steady at N1,560/$1.
Currency traders and market analysts predict that the naira may continue to appreciate due to the Central Bank of Nigeria’s consistent foreign exchange inflow.
Meanwhile, the US dollar strengthened amid anticipation of new inflation figures, gaining 0.30% against the Euro (trading at 1.16) and 0.20% against the British pound (now at $1.34).
US Dollar Index and Fed’s Potential Rate Cuts
The US Dollar Index (DXY) remained relatively flat at 98.50, losing value against a basket of six other currencies. The market is anticipating that the US Federal Reserve (Fed) may lower interest rates, especially following a jump in job numbers and leading PMI indicators.
Analysts suggest there is a 90% likelihood of rate cuts during the September Fed meeting, with an expected reduction of 58 basis points (bps) by the end of the year, including the possibility of a third cut.
US-China Trade Relations: 90-Day Tariff Extension
In other news, President Donald Trump extended a 90-day pause on higher tariffs on Chinese goods, which was set to expire in early November. This truce was extended until November 10, signaling a temporary stabilization in US-China trade relations.
Trump confirmed the move in a Truth Social post, stating that all other terms of the agreement would remain the same. Both the US and China agreed to ease tit-for-tat tariff increases and relax restrictions on rare earth magnets and specific technologies.