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US Dollar Fails to Surpass Nigerian Naira Despite Outpacing Yuan & Yen

The US dollar is now breaching new milestones as the leading currency by making its presence felt on a macro level. The USD has risen against the Chinese Yuan, Japanese Yen, and Indian Rupee, marking its position as a leading currency player in the space. However, a new competitor has risen, which yields enough power to subdue the might of the USD and outpace it. 

The current world order is promoting the rise of regional and local currencies, with the multi-polar currency concept catching pace. The concept permits other local currencies to gain market momentum, and this time the tidal wave of changing financial dynamics is promoting the Naira, the Nigerian currency, which is up 12% this month. 

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The Rise of Naira

Nigeria FlagNigeria Flag
Source: International Atomic Energy Agency

After experiencing months of volatility and unpredictability, the Nigerian naira rose 12% in April against the USD. The currency has rallied throughout March to reach its current value pace, beating all odds that intended to pin the currency down to new lows. 

Naira’s rising pace has earned it the title of the best-performing fiat currency in April, besides the US dollar The rally stabilized the Naira’s value against the USD, with NGN1,800 per greenback observed in early March dropping to over NGN1,230 per dollar recorded in the second week of April. 

Naira’s overall value appreciation has primarily been backed by its oil export narrative. The region has been deriving maximum benefits from the current oil pricing scenario, helping the region to gradually increase its oil exports and sales. Similarly, the country has been experimenting with its monetary policy rates, hiking its metrics up to make its market appear more lucrative to foreign investors. 

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“The CBN raised the MPR to over 24.5%, making the country’s money market more attractive to foreign investors. Higher returns on Treasury bills, selling at over 20%, have attracted foreign portfolio investors, thereby increasing FX supply.”

In an interview with Bloomberg, Goldman Sachs economist Andrew Matheny shared that the naira’s rise can be further solidified if policymakers do not deviate from its current course of progress. 

“This probably can run further; we would see an extension of the move to 1,000 and maybe even sub-1,000,” Goldman’s Andrew Matheny said in an interview. “Six weeks have gone by and they’re continuing to hold the line, so that’s encouraging,” he said.

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