The naira is expected to depreciate slightly at both the official and parallel markets on the back of gradual increase demand for forex by small businesses stocking for forthcoming Christmas and New Year sales.
The local currency was quoted at 470 to the dollar on the parallel market yesterday, weaker than N465 a dollar last week due to increasing demand for dollars, traders said.
Commercial banks quoted the naira at N305 per dollar on the official window, near levels it has closed since August.
“The clamp down on black market operators by security agents has negatively impacted dollar supply to the market,” one Bureau de changer operator said.
Security agents have been raiding the offices of black market currency dealers, ordering some to sell dollars at a lower rate in a bid to break the fall of the local currency.
Also, dollar bullish investors received a welcome boost on Wednesday following the string of positive US economic data releases which elevated sentiment towardsthe US economy and reinforced expectations of a December rate hike.
The hawkish FOMC meeting minutes showed that policy makers agreed that it could become appropriate to raise rates relatively soon, and this gave investors the final bit of long sought clarity ahead of December’s Fed meeting.
With most members even arguing that failing to raise rates in December could tarnish the Federal Reserve’s credibility, bulls may run rampant consequently keeping the Greenback buoyed.
From a technical standpoint, according to Lukman Otunuga, Research Analyst at FXTM, dollar Index remains heavily bullish on the daily time frame with a breakout above 102.00 encouraging another incline higher towards 103.00.
“The combination of dollar strength and Yen weakness amid the Trump effect has sent the USD JPY gravity defying levels with prices hovering around 113.00 as of writing.
“This pair is very bullish on the daily time frame as prices are trading above the daily 20 SMA while the MACD has crossed to the upside. Dollar strength from the skyrocketing US rate hike expectations could be the engine which drives the USD JPY to levels not seen since February 2016 above 115.00.
A sharp breakout above 113.00 could spark a further incline towards 115.00 in the coming weeks,” he said