•Dollar Shortage Worsens as Nigerian Firms Predict Further Decline
The Naira has suffered a significant loss, exceeding the N1160 threshold against the US dollar at the black market.
This decline is attributed to seasonal demand, with the Nigerian upper class typically traveling or paying for their children’s education abroad during this time of year.
Despite efforts to stabilize the currency, the Naira has lost over two-thirds of its value since President Bola Tinubu removed regulations last year.
“The Naira gained 4.8% on Wednesday after the government successfully raised $900 million in its first domestic dollar bond; however, this gain was reversed due to a dollar shortage,” said Olumide Adesina, a financial market writer and analyst.
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The US Dollar Index has also decreased, leading to a slight increase in expectations of a 50 basis point interest rate cut by the Federal Reserve. This has caused the value of the US dollar to plummet to its lowest position in almost nine months against the Japanese yen.
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According to a CBN poll, Nigerian firms anticipate that the Naira will fall between now and December but will strengthen the following year.
However, the local currency’s present situation defies forecasts from institutions like Renaissance Capital, Goldman Sachs, and the Financial Derivative Company, which predicted the Naira would settle at N1000 or less.
“The Federal Reserve may announce a significant 50 basis point interest rate decrease at its policy meeting next week, according to media sources,” said Bill Dudley, former president of the New York Fed.
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