Naira Poised to Breach the N1,500/$ TheExchange Rate
The Nigerian currency is on the cusp of surpassing the critical resistance level of N1,500/$ in Nigeria’s official market, being merely N30/$ shy.
On Friday, the Naira is trading at N1,528/$, a slight dip from Thursday’s closing figures.
The fundamentals of Nigeria’s Naira have markedly enhanced following the resumption of foreign currency transactions utilizing naira debit cards by Nigerian banks.
Guaranty Trust Bank (GTBank), United Bank for Africa (UBA), Wema Bank, and Stanbic IBTC have reinstated international spending capabilities for their customers using naira cards.
GTBank has informed its clientele that they can now purchase their preferred goods globally with a naira card, which carries a $1,000 limit for international transactions over a three-month period.
“This limit encompasses cash withdrawals from overseas ATMs up to $500 and online and point-of-sale transactions up to $1,000. We wish to remind everyone that the $1,000 cap on all other transactions outside Nigeria applies to cash withdrawals, online payments, point-of-sale payments, and services related to withdrawals paid for in dollars,” the bank with the orange branding stated.
UBA also expressed, “In line with our steadfast commitment to enhancing your banking experience, we are pleased to announce that all UBA Premium Naira Cards, including Gold, Platinum, and World variant cards, are now fully operational for international transactions.”
The Naira’s stability has been bolstered by the IMF’s endorsement of Nigeria’s disinflation strategy. They have characterized the CBN’s stringent monetary policy as “appropriate and necessary” in curbing inflation expectations and fortifying the macroeconomic framework, as detailed in the Fund’s latest Article IV Consultation Report for 2025.
“Directors concurred that the Central Bank of Nigeria is suitably maintaining a stringent monetary policy stance, which should persist until disinflation takes firm hold,” the IMF stated in the report released on Wednesday.
The IMF also recognized the CBN’s policy shift to halt deficit monetization, a practice that had previously fueled inflation. They commended efforts to enhance governance and transparency within the monetary system.
During the last MPC meeting in May, the Nigerian Apex Bank maintained the MPR at 27.5 percent and upheld the Cash Reserve Ratio at 50 percent for commercial banks and 16 percent for merchant banks.
Dollar Index Dips in Global Markets
The greenback softened on Friday following gains in the prior session.
The Dollar Index fell by two-tenths of a percentage point to 96.605, reflecting the dollar’s performance against a basket of six other currencies. It exhibited marginal declines over the week, notwithstanding a 0.4 percent rise on Thursday.
Stronger-than-anticipated US employment data deferred the Federal Reserve’s potential rate-cutting timeline, bolstering the US currency on Thursday. However, these gains were fleeting as attention shifted to ongoing trade negotiations between the US and various trading partners, with high tariffs slated to take effect on July 9.
Further Insights
To date, only three agreements have been disclosed, and US President Donald Trump intensified tensions by announcing on Thursday that numerous countries will receive communications on Friday detailing the tariff rates they will face.
This marks a divergence from Trump’s earlier commitment to negotiate individual agreements with trading partners.
Jerome Powell, the chairman of the US Federal Reserve (Fed), has been at loggerheads with Trump for several weeks. While the European Central Bank (ECB) has lowered its key interest rates multiple times, Powell remains reticent to follow suit.
His concern? The potential for inflation to spiral out of control once more.
Nonetheless, Jerome Powell intimated that he might consider rate reductions in the coming months at the ECB’s Sintra forum in Portugal.
“When we observed the magnitude of the tariffs and that almost all inflation forecasts for the United States have increased significantly, we suspended our activities,” the Fed chairman remarked. Additionally, he assured that his sole focus is bequeathing a “healthy economy” to his successor.
However, it should be acknowledged that a reduction in key rates could also result from a devaluation of the US dollar. In Europe, EUR/USD edged up by 0.1 percent to 1.1774, with the single currency anticipated to gain 0.5 percent over the week.
German industrial orders fell 1.4 percent from May on a seasonally and calendar-adjusted basis, a decline markedly greater than expected, according to data released earlier on Friday.
The European Central Bank reduced interest rates for the eighth time within a year in June, but policymakers indicated they would likely pause at their subsequent meeting.
