The naira traded at its lowest in the official market despite the U.S. dollar index falling to a three-week low ahead of U.S. jobs data.
In the official market, the naira lost ground against the US dollar on Thursday, rising above N1,400 against the haven currency.
The naira fell about 1%, from the N1,390 reported at the close of trading on Tuesday, according to data from the FMDQ exchange securities. Wednesday was a public holiday.
The intraday high at the Nigerian Autonomous Foreign Exchange Market closed at N1,445 on Thursday, down from N1,450 on Tuesday. Additionally, the intraday low dropped from N1,200 on Tuesday to N1,299 on Thursday.
The dollar index, which evaluates the greenback’s strength against six major currencies, fell to its lowest position since April 11 at about 105.2 index points. It fell by about 1% this week, putting it on pace to see its biggest weekly loss in almost two months.
The Nigerian naira has been unable to take advantage of the falling dollar index as the index remained close to its three-week low after Fed Chair Jerome Powell ruled out the likelihood of an increase in interest rates during the FOMC meeting.
As anticipated, the Federal Reserve kept interest rates unchanged at the end of its two-day meeting to discuss monetary policy on Wednesday.
Nonetheless, US sticky inflation levels continue to worry federal officials, who forgo premature policy rate reductions.
Investors are now looking to the April non-farm payrolls report later in the day to see if the Federal Reserve will change its stance on interest rates.
Reduced demand for the greenback as a haven because of lessening geopolitical tensions in the Middle East is expected to cause the currency to decline below the 105 level.
After Federal Reserve Chair Powell told reporters that interest rates could need to stay high for a longer time but rejected ideas of raising them again, traders are now focusing on the U.S. nonfarm payrolls data, which is scheduled for release later today.
Currency traders are now keen on the April jobs report, where healthy growth of 240,000 nonfarm positions is anticipated. Strong labor market data and a gradual tightening of monetary policy should give the DXY bullish momentum in the near run, given the present economic indications and the Fed’s strategic positioning. The prevailing attitude is nevertheless cautiously positive because currency stability is still in danger from inflation and policy reactions.
According to JP Morgan, U.S. robust job market and inflation data demonstrate how durable the US economy has proven to be. This is because of the anticipation of less easing by the Federal Reserve (Fed) this year, which should maintain the currency’s strength for the rest of the year, the dollar has consequently achieved all-time highs.