The exchange rate at the parallel foreign exchange market plunged again on friday 10th September 2021 to close at N545/$1. The tenacious fall of naira in respect to dollar arises from the increased demand for dollar in the forex market accompanied by a drop in supply.
The shortage of supply of dollars can be attributed to uncertainties in the business and foreign exchange environment from the banning of BDC’S operators to the eradicating of special intervention from the CBN to BDC’S as well as the shift of major forex supply to banks has all created a discombobulated atmosphere in the market.
The CBN recently indicated it will inoculate dollar to authorized banks to keep afloat with the high demand , this is as a result of individuals in the market experiencing dollar shortage thus relying on parallel market for forex transactions.
INTERNATIONAL FOREX NEWS
Dollar Hits Two-Week High
The dollar strengthened to a two-week high versus a basket of major currencies on Monday as market expectation builds that the Federal Reserve could taper its stimulus sooner rather than later despite a surge in COVID-19 cases.
The dollar index rose 0.3% to 92.880 in early European trading hours, its highest level since August 27. It was last up 0.2%.
A flurry of U.S. economic data is due out this week, starting with U.S. consumer price data on Tuesday, which will frame the economy’s progress ahead of the Federal Reserve’s meeting next week.
The Philadelphia Fed President Patrick Harker became the latest offical to say he wants the central bank to start tapering this year, saying in a Nikkei interview that he was keen to scale back asset purchases.
“The U.S. dollar’s recent rebound has coincided with more hawkish comments from Fed Presidents,” FX analysts at MUFG said in a note.
The Wall Street Journal reported on Friday that Fed officials will seek to make an agreement to begin paring bond purchases in November.
Further U.S. data this week should help set the tone ahead of the meeting, with retail sales and productions figures also slated for later this week.
The euro was among the currencies to lose ground to the dollar, dipping 0.3% to $1.17750, its lowest level in a little over two weeks, after the European Central Bank said last week it would start to trim its own emergency bond purchases.
The yen also fell back around 0.2% and was last at 110.090.
“A couple of dynamics favour the dollar,” said Rodrigo Catril, senior currency strategist at National Australia Bank (OTC:NABZY) in Sydney.
“Re-opening still faces challenges from the consumer, who is cautious and from bottlenecks which restrict ability for the economy to rebound with some gusto.
“At the same time rising infections suggest we may still need to reintroduce restrictions of some sort. The other thing is that the Fed continues to signal that tapering is coming.”
