The USD to NGN exchange rate has experienced fluctuations amidst various macroeconomic factors influencing both currencies. Recently, the USD has maintained a rangebound trading pattern, particularly as investors awaited the release of critical inflation data. Analysts emphasize that a stronger-than-expected US Consumer Price Index (CPI) report could bolster the USD by tempering expectations of a Federal Reserve interest rate cut, while a softer outcome may exert downward pressure on its value.
In relation to the NGN, the currency has been under significant strain due to local economic conditions. Recent reports indicate that Nigeria's inflation has dropped to 18.02%, the lowest in over three years, primarily due to reduced food prices. While this decline is positive, it comes alongside forecasts of continued currency depreciation, spurred by foreign investors liquidating local assets amid global uncertainties and limited USD supply from the Central Bank of Nigeria. Furthermore, the recent reduction of the benchmark interest rate by the Central Bank signals a shift in monetary policy aimed at stimulating growth, which could further undermine the NGN.
Currently, the USD to NGN exchange rate hovers near 90-day lows at approximately 1460, which is about 3% below its 3-month average of 1505. This range of stability reflects a tight corridor of trading activity between 1460 and 1539. Market experts note that the rate's performance could be impacted by external factors, including oil price trends; the recent oil prices have reached 14-day highs, which could support the Nigerian economy given its reliance on oil exports. However, oil prices have exhibited notable volatility, trading in a substantial range from 60.96 to 73.37 over the last three months.
Moving forward, currency analysts suggest closely monitoring both the upcoming US inflation data and developments in Nigeria's monetary policy as these factors are likely to influence the USD/NGN exchange rate dynamics in the near term. Understanding these trends and their implications may help individuals and businesses make more informed decisions regarding international transactions.
