Naira remains firm as Dollar extends recovery against rival currencies

The Nigerian Naira has retained its strength against the United States of America Dollar at the parallel segment of the Foreign Exchange Market. The local currency traded at the rate of N362 against the greenback at the black market on Wednesday.

Against the British Pound Sterling, the Naira exchanged at the rate of N500 and exchanged at the rate of N445 against the European Single Currency, Euro.

The recent appreciation of the Naira can be attributed to intervention of the CBN at the foreign exchange market

The indicative exchange rate for the I&E plunged further to N360.25 per dollar, from N360.28 per dollar on Monday, translating to a 3 kobo appreciation of the naira, data from Financial Market Dealers Quote (FMDQ) showed.

The surged was buoyed by a 23 percent increase in the volume of dollars traded in the I&E window. The window recorded a turnover of $223.38 million, indicating a $42.28 million increase from $181.01million recorded on Monday.

Meanwhile, on the international scene, the U.S dollar advanced on Wednesday, February 21, as traders’ near-term focus shifted to the minutes of the Federal Reserve’s last policy meeting for hints on the future pace of U.S. monetary tightening.

The dollar benefited from the higher yields, with its index against a basket of six major currencies edging up to a one-week high of 89.904. The index has bounced 0.9 percent so far this week after slumping 1.5 percent the previous week to a three-year low.

The U.S. currency has been weighed down by a variety of factors this year, including concerns that Washington might pursue a weak dollar strategy and the perceived erosion of its yield advantage as other countries start to scale back their easy money strategies.

Confidence in the dollar has also been shaken by mounting worries over the U.S. budget deficit.

But the greenback managed to find bids once the dust began to settle after last week’s tumble.

“We are seeing the dollar being bought back after last week’s slide. The steady U.S. economy and the possibility of the Fed accelerating its rate increases will likely keep fuelling the dollar’s rebound, particularly against the euro and yen,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.

The dollar extended an overnight surge and gained 0.45 percent to 107.800 yen. The euro fell 0.1 percent to $1.2323 following losses of 0.55 percent the previous day. The Australian dollar lost 0.4 percent to $0.7852 and the New Zealand dollar dipped 0.2 percent to at $0.7333.