The Nigerian naira experienced a slight strengthening against the US dollar on Friday, as shown by gains in both the official and parallel foreign exchange markets.
The Naira rose from N1,552 per dollar on Thursday to N1,545/$ in the parallel market.
CBN data indicated the local currency appreciated to N1,531/$ on the Nigerian Foreign Exchange Market (NFEM) from N1,533 per dollar on the previous trading day.
The naira gained 0.14% against the American dollar in the Nigerian Foreign Exchange Market (NFEM) by the end of the month.
Nigeria’s foreign exchange inflows increased amid higher diaspora remittances and foreign portfolio investors (FPIs). Nigeria’s external reserves, which give the CBN the capacity to support the naira, grew by $1.72 billion to $41.3 billion within the month.
The CBN Chief, Yemi Cardoso, stated that Nigerian diaspora remittances rose by 200 percent to $600 million in the last two months, significantly boosting Nigeria’s foreign exchange profile.
Offshore investor inflows increased from $1.5 billion in June to $1.7 billion, showing cautious foreign investor interest when favorable carry trade conditions and stable global macroeconomic factors are present.
Mr. Yemi Cardoso clarified that Nigerians living overseas no longer require alternate means of sending money home due to improved remittance channels and stronger exchange rates. He claims that growing diaspora flows are lessening Nigeria’s dependency on oil earnings and diversifying its foreign exchange portfolio.
The US dollar index finished the week positive as investors increased buying pressure on the greenback. the US dollar regained some of its previous decline this week after three consecutive weekly losses.
However, the Dollar Index (DXY) still trades below 98, maintaining its position near the lower end of its annual range.
The July rebound only temporarily interrupts the steep monthly pullback. These figures were probably on the mind of Fed Governor Christopher Waller, one of Powell’s potential successors, when he stated last night that a 50-basis-point interest rate cut in September was not necessary.
The Fed chief left some flexibility but by emphasizing that this decision would depend on upcoming labor market data next week,
U.S Inflation data is also likely to argue against a 50-basis point interest rate cut as a cold start. Our economists expect a month-over-month core rate of 0.3 percent for today’s PCE deflator, which may be too high to support a report
Former Governor Lael Brainard warned that such moves could be a prelude to a re-election strategy aimed at replacing several Fed regional presidents to overhaul the FOMC, while Fed Governor Cook defends her position against President Trump’s attempts to remove her.
Generally, options pricing over one- and three-month periods shows a higher premium for USD put options compared to calls, indicating that investors expect the ongoing unrest surrounding Fed Governor Lisa Cook’s dismissal to keep the USD weak in the medium term, despite the market’s seemingly indifferent attitude toward the situation.
Trade news has been surprisingly quiet. Meanwhile, Trump’s focus shifted back to Washington aside from the tariff threats directed at India.
Trade news has been surprisingly quiet. Meanwhile, Trump’s focus shifted back to Washington aside from the tariff threats directed at India.
He made efforts to remove Fed Governor Lisa Cook, who has since filed a lawsuit to defend her position. He has also been attempting to install more dovish-aligned figures at the central bank.
Markets responded by increasing short-term yields, which then quickly plummeted due to new dovish policies.
Powell’s position appears secure, with his term lasting until 2026. However, the broader debate about the independence of the Federal Reserve has become much more evident. Concerns about a more politicized Fed have grown after Trump’s recent actions.
Firing the BLS commissioner and ongoing disputes with Powell over seemingly “rigged” jobs data are indicative signs. Trump is also filling positions with loyalists, like nominating Stephen Miran and favoring Waller over Powell.
The risk is a Fed more willing to approve rate cuts that align with Trump’s preferences. While tariffs have political appeal, they remain costly. Currently, there’s no significant impact on consumers, but prices for groceries and personal goods will rise, household spending will tighten, and the economic slowdown will deepen.
Some Trump aides even seem to welcome a lower dollar to boost exports, but increasing US manufacturing will require much more than tariffs to succeed. The Fed hit a milestone with a steady interest rate of 4.25%-4.50%. For the fifth time at this meeting, Powell expressed confidence in the labor market, noting “full employment.”
the Fed will need to maintain a “moderately restrictive” stance with inflation still “sticky,” along with tariff policies. The US Treasury yield curve remains stable, with the benchmark 10-year ending a three-day decline and holding at 4.22 percent, near four-month lows. The 30-year yield is now at 4.90 percent, ending a two-day losing streak.
The yield on the 10-year TIPS is around 1.81 percent. Peace efforts were failing, and geopolitical tensions remain high.
The White House stated that it believed Putin had agreed to meet with Ukrainian President Volodymyr Zelenskyy and that preparations were underway After US President Donald Trump and Russian President Vladimir Putin met in Alaska
However, German Chancellor Friedrich Merz told reporters that it now seems certain that no such meeting will happen, raising doubts about the chances of a negotiated settlement.
These statements underscored the fragile and worsening state of the European Union (EU) and British diplomatic offices, came just hours after a deadly Russian missile strike on Kyiv that killed at least 23 people and damaged diplomatic facilities.