As demands continue to regularly exceed supply, the naira continues to fall in the parallel market as forex traders are selling at the rate of N1,050 to the dollar.
Consequently, the naira has lost more than 40 percent against the US dollar since the mid-June devaluation.
Although the measures were aimed at improving the country’s financial and foreign accounts, the inflationary impact was short-lived.
Furthermore, the dollar index, a measure of the US currency against its six rivals, was at 105.64, not far from 105.55, its lowest since September 25.
The dollar was little changed but hovered near a two-week low on Thursday after minutes from the Federal Reserve’s latest meeting showed that policymakers were taking a cautious stance, as investors wait for important data on US inflation.
According to the minutes released on Wednesday, Fed officials emphasised that uncertainties regarding the economy, oil prices and financial markets supported “the case for carefully determining how much additional policy tightening may be appropriate.
Rising bond rates have been mentioned by Fed members as a factor that might allow them to stop the rate-hike cycle in recent remarks.”
The CME FedWatch tool highlighted that the futures markets are pricing in a 26 percent chance of a 25-basis point hike at the December meeting and a nine percent chance of a 25-basis point hike at the November meeting.
The dollar’s recent weakness has been driven by falling Treasury yields as bond prices rose following the Fed’s softer stance on future rate hikes.
It will be recalled that the parallel market breached the N1,000/$1 threshold in September, initially perceived by some analysts as a temporary occurrence.
The government’s inability to attract forex inflows has resulted in an ever-depreciating exchange rate with continuous declines.
