The Nigerian naira continues to feel the heat in the black market, holding steady against the U.S. dollar on Thursday despite the greenback’s resilience following an interest rate cut by the U.S. Federal Reserve. The naira traded at N1,660/$1 in the parallel forex market, maintaining its previous level, while it also remained unchanged against the British pound, closing at N2,220/£1.
Despite the U.S. Fed’s recent decision to lower its interest rate by 50 basis points, the naira is still under significant pressure. The Central Bank of Nigeria (CBN) has taken steps to stabilize the currency, but weak oil production—Nigeria’s primary source of foreign exchange—has hindered efforts to boost the naira’s value.
With foreign exchange demand rising for vacations, fuel imports, and overseas education, analysts predict more selling pressure on the naira in the parallel market. As a result, speculators and short sellers seem to be in control, keeping the currency below the critical N1,600 threshold.
Globally, the U.S. dollar index surged by 50 basis points following the Federal Reserve’s decision to reduce interest rates. Despite the rate cut, the central bank hinted at potential future rate hikes, which helped strengthen the dollar. This move is seen as a balancing act by the Fed to maintain economic stability while addressing inflation concerns.
Federal Reserve Chairman Jerome Powell’s comments on the U.S. labor market remaining strong and his suggestion of further rate cuts to control inflation have sparked mixed reactions. Powell emphasized that the U.S. economy is on track to meet its inflation goals, which could keep the dollar’s strength intact.
Traders and market experts are closely watching the naira-dollar exchange rate, anticipating further fluctuations as demand for foreign exchange rises. With Nigerian oil output still sluggish, the naira’s vulnerability in the black market is likely to continue, with potential implications for businesses and consumers.
