The Nigerian naira has weakened to a new low of N2,200 per British pound on the black market, amid sustained demand pressure and currency volatility.
The local currency has been depreciating against the pound, dollar, and euro over the past three months, despite the introduction of the Retail Dutch Auction by the Central Bank of Nigeria (CBN).
The CBN’s efforts to fortify the naira have been hindered by tepid oil production, petrol subsidies, and weak dollar liquidity, despite an increase in the country’s foreign exchange assets. Importers and travellers have added to the pressure on the local currency market, amid a relatively fragile FX market.
The GBP/USD pair has been trading in a narrow range, with market participants awaiting the US Non-Farm Payrolls data for August, which could influence the Fed’s outlook on interest rates. The US Non-Farm Payrolls job growth is expected to be a significant event that will attract substantial attention from investors.
The British pound has been performing well against the US dollar, increasing by 4% this year, amid market bets that more rate cuts will occur in the US this year compared to the UK. The UK economy has improved, recovering from the previous year’s decline, and policymakers’ recent remarks suggest that the Fed is more willing to lower borrowing costs than the Bank of England.
