Dollar Drops Have Significant Detriment On Naira

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Naira Strengthens To N435/$ From N525 As CBN Continues Intervention

Emerging report have it that the American dollar has sank to its lowest level in more than two months as the currency market adopted a markedly dovish view on the United States monetary policy after data showed the economy virtually stagnating in the first three months of the year.

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However, according to Financial Times, as the market awaited the outcome of a meeting of the Federal Reserve policy makers, government bonds and equities on both sides of the Atlantic also came under pressure.

This was particularly so in Europe as the euro broke above key resistance levels, further aided by more signs that the European Central Bank’s quantitative easing programme was helping to ease deflation pressures and improve credit conditions.

By midday in New York, the dollar index (a gauge of the currency’s value against a weighted basket of peers) was down 1.1 per cent at 95.09, the lowest since the end of February. In mid-March, the measure reached a 12-year high above 100.

Mr. Ayodeji Ebo, who is an analyst at Afrinvest West Africa Limited, revealed that the drop in dollar might not impact the naira immediately.

He, however, said that if the fall persisted, it might affect foreign portfolio inflow.

He said, “The fall in dollar’s value may affect the FPI if it persists; it may not have direct impact on the naira immediately. However, it may have a very little impact if it persists for a long time.”



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