Naira shows strength, as dollar hits two-year low against British Pound

The Naira strengthened against the US dollar during Friday’s trading session.

The haven currency experienced significant declines against the British pound sterling, which reached its highest level in over two years following Federal Reserve Chair Jerome Powell’s indication that the anticipated interest rate cut in September will proceed.

FMDQ data revealed that the local currency appreciated against the dollar to N1,570.14/$, improving from N1,586.1/$ on Thursday.

This represents a N16 gain against the US dollar compared to Thursday’s rate at Nigeria’s FX Market.

Similarly, on the black market, the naira’s value increased from N1,620/$ to N1,615/$ on Friday. The Central Bank of Nigeria (CBN) has intensified its efforts this month to reduce the volatility of the naira’s exchange rate.

This has partially contributed to the naira’s gradual strengthening against the dollar, along with the dollar index hitting new lows this year due to a more dovish Fed statement.

The Nigerian currency began to rise after reaching its N1,912/$ low in late February, fell below N1,000/$ in April, and is now around N1,585/$.

Nigerian businesses expect the naira to weaken further before strengthening in late 2024 or early 2025, according to a recent survey conducted by the CBN. Despite the CBN injecting millions into the forex market, this pessimism persists.

However, most Nigerian businesses remain optimistic despite concerns about the immediate future of the naira. More than 1,600 Nigerian businesses participated in the CBN’s Business Expectations Survey, which indicated that respondents anticipated the naira would weaken in July and August, as well as over the next three months.