The Naira continued to face significant pressure in the parallel market, trading steadily at N1,660/$1 against the U.S. dollar on Thursday. Despite a recent U.S. Federal Reserve interest rate cut, the Nigerian currency remained unchanged against both the dollar and the British pound, where it also traded at N2,220/£1.
The U.S. central bank’s decision to cut its benchmark rate by 50 basis points to a range of 4.75% to 5% was seen as less dovish than expected, as future rate hikes were not entirely ruled out. This allowed the U.S. dollar to gain further strength, contributing to the ongoing pressure on the Naira.
Nigeria’s Central Bank interventions have done little to stabilize the Naira, with oil production, a key driver of the country’s foreign exchange, still underperforming. As demand for foreign currency continues to grow for fuel imports, vacations, and overseas tuition payments, the Naira is expected to experience further depreciation in the near term.
Meanwhile, the U.S. Dollar Index rose by over 40 basis points following the Federal Reserve’s announcement, signaling market confidence in the dollar’s resilience. Federal Reserve Chairman Jerome Powell noted the labor market’s strength and suggested that while more rate cuts could follow, inflation was steadily approaching the Fed’s 2% target.
Technical indicators point toward a bearish trend for the U.S. dollar, but it remains strong in the short term, leaving Nigeria’s Naira vulnerable to further depreciation unless oil revenues and economic reforms stabilize the market.
