Naira firms as dollar weakens on Fed rates pause

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The naira continued to remain strong as the Dollar is seen weakening on expectation that the Federal Reserve of the United States of America might pause its interest rate hike.

The naira which is being bolstered by increased inflow mainly from the Central Bank of Nigeria (CBN) is currently selling at N358 to the dollar at the Bureau de Change market and N360 at the parallel market.

To ease the pressure on the local currency, the CBN had last year November increased its weekly foreign exchange sales to BDCs from $60,000 to $75,000. According to the apex bank the special intervention of $15,000 on Thursdays, in addition to the Monday, Wednesday and Friday auctions was to run during the festive season.

Leadership findings show that the CBN has continued to hold the special intervention giving strength to the local currency at the BDC and parallel end of the market.

The currency however weakened further at the Investors and Exporters window as it closed yesterday at N365.87 from N365.10 which it closed on Monday and N364 which it sold last week.

Analyst at FXTM, Lukman Otunuga noted that the naira may see better days ahead “with the Dollar seen weakening in the medium term on expectations over the Fed taking a pause on rate hikes and oil rising from trade hopes.

“As the first trading month of 2019 gets underway, investors will be keeping a close eye on the inflation figures scheduled for release this Monday, January 14. Although signs of easing inflationary pressures will be a welcome development for the Nigerian economy, consumer prices are expected to rise on increased government spending.

“With the Central Bank of Nigeria expected to maintain status quo on interest rates this month, all eyes will be on the presidential elections in February” he stated.

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