The exchange rate at the black market depreciated again to N557/$1 at close of business on Tuesday the 14th of september 2021 in the foreign exchange market. on the other hand, the exchange rate between the naira and the US dollar closed at N412.08/$1, at the official Investors and Exporters window.
The local currency dipped by N7 at the black market following CBN’s actions to increase foreign exchange supply to authorized banks. The demand pressure for forex continued despite an 8.02% improvement in dollar supply at the official window.
INTERNATIONAL FOREX MARKET
The dollar drifted in tight trading ranges Wednesday, with the recent release of soft U.S. inflation data raising uncertainty over whether the Federal Reserve will start its stimulus withdrawal this year.
At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded marginally higher at 92.620.
USD/JPY fell 0.1% to 109.51, EUR/USD edged higher to 1.1805, while the risk sensitive AUD/USD fell 0.1% to 0.7312.
Tuesday’s U.S. inflation data for August came in below expectations, with the core consumer price index, which excludes the volatile food and energy components, edging up just 0.1% last month. This suggested that the upward pressure on inflation was starting to wane.
Several Fed officials have suggested the U.S. central bank could reduce its buying of debt securities by the end of the year, but a weaker-than-expected payrolls report at the start of the month and lessening inflationary pressure has created some doubt ahead of next week’s Federal Reserve meeting.
“The Fed passed on the opportunity to signal taper in August and now it looks like it could do it again in September,” said Kathy Lien, an analyst at BK Asset Management, in a note.
The Wall Street Journal reported on Friday that Fed officials will seek an agreement to begin paring bond purchases in November.
Elsewhere, GBP/USD rose 0.1% to 1.3816, after U.K. inflation surged more than expected in August, adding to pressure on the Bank of England to rein in its monetary stimulus. Money markets are now pricing in two interest rate hikes from the BoE by the end of next year.
Consumer prices jumped 3.2% on the year in August, the most since March 2012, after dipping back to the central bank’s 2% target month before. Ominously, the figures don’t even capture the huge spike in energy prices that has happened in the last months.
USD/CNY rose 0.1% to 6.4426 after a number of Chinese data releases pointed to a slowdown in growth in the second-largest economy in the world.
The country’s retail sales grew 2.5% year-on-year, a sharp drop from July’s 8.5% growth and at the slowest pace since August 2020, while industrial output grew 5.3% year-on-year, its weakest pace since July 2020.
The British pound showed gains earlier in the day and punched above the 1.39 line. However, the currency was unable to consolidate these gains. GBP/USD is currently trading at 1.3853, up 0.09% on the day.