Official Market Movements
The Nigerian naira weakened slightly against the US dollar during the first trading session of the week, while the dollar showed resilience in the global market.
Data from the Central Bank of Nigeria indicated that the naira depreciated by N1.68/$, or 0.1%, closing at N1,535.9/$ compared to N1,534.29/$ in the previous session.
Against the British pound, the naira appreciated by 20 kobo to close at N2,060/£1 from N2,060.34/£1.
It also gained N3.85 against the euro, ending the day at N1,782.75/€ from N1,786.6/€.
In the black market, the naira-to-dollar exchange rate remained unchanged at N1,560/$1.
Analyst Outlook on the Naira
Currency traders and market analysts expect the naira to retain a measure of stability due to the Central Bank of Nigeria’s consistent foreign exchange inflows.
Dollar Gains in Global Trading
Globally, the US dollar gained ground ahead of new inflation data, supported by trade developments and steady investor demand.
The greenback strengthened by 0.30% against the euro, trading at 1.16, and rose by 0.20% against the British pound to $1.34.
US Dollar Index and Interest Rate Expectations
The US Dollar Index (DXY) traded flat at 98.50, losing some value relative to a basket of six other major currencies.
Investors are betting on possible interest rate cuts following strong US job numbers and higher PMI readings.
The headline US CPI for July is expected to increase by 2.8% year-on-year, with the core CPI projected to rise by 3.0% for the same period. If the results come in lower than forecast, analysts believe the Fed’s rate-cut expectations could shift, potentially pushing the DXY lower.
Rate Cut Probability
Market forecasts point to a 90% probability of rate cuts at the September meeting, with a total of 58 basis points in reductions anticipated by the end of the year. This would likely mean two quarter-point cuts and a one-third chance of a third cut.
Trade Truce Between US and China
In global trade developments, US President Donald Trump extended a 90-day pause on higher tariffs on Chinese goods, moving the deadline to November 10. The extension aims to maintain stability between the world’s two largest economies.
The agreement also includes a mutual decision to reduce tit-for-tat tariff increases and ease export restrictions on rare earth magnets and certain technologies.
Trump stated that “all other elements of the Agreement will remain the same,” while China confirmed it would also prolong its suspension of tariffs for an additional ninety days.
Very fascinating to know 👍