* As Analysts, Market React To News On CBN
* Presidency Debunks Story
The anxiety at the nation’s foreign exchange market, resulting from persistent poor naira showing and reported forced resignation of the Central Bank (CBN) governor, Yemi Cardoso continued as the local currency, Naira lost over N100 against the greenback at the official window.
It extended to the black market where, it is being sold between N1678/$, on Wednesday morning, higher than N1,656/$ sold the previous day.
Although the federal government has denied the report of forced resignation of Cardoso, the market was on Wednesday morning divided on the issue.
While some analysts say there is need for more pragmatic and decisive approach by the governor and his Monetary Policy Committee (MPC) members towards Policy issues and management of the apex bank, which they claim,may have lost steam, others feel it is too early to call.
Cardoso has faced criticism for his inability to address the ongoing economic challenges and stabilise the Naira.
However, the general consensus was that the governor and his deputies need to be focused, think outside the box as the promised reliefs have not been seen nor felt as at yet.
This is even as the feeling in some quarters is that Cardoso and his team have lost focus and gradually being derailed by externalities at the expense of the core mandate of the regulatory bank.
Also, the dollar wavered on Wednesday, while the yen regained some lost ground as investors made last-minute tweaks to positions ahead of a policy meeting expected to begin a U.S. easing cycle.
The Federal Reserve is expected to make its first interest rate cut in more than four years at 1800 GMT, with markets pricing a 2/3 probability of a 50 basis point cut.
The dollar has fallen along with U.S. yields since July and at $1.1119 per euro is not far from the year’s low at $1.1201 in anticipation of U.S. easing at a clip, with more than 100 basis points of rate cuts priced in by Christmas.
The yen, up more than 12% since July, has been surging because the Bank of Japan – which sets policy on Friday – has been hiking rates at the same time as the Fed prepares to cut.
It rose about 0.7% to 141.41 per dollar on Wednesday, recouping part of an overnight drop. The yen was up 0.6% to 157.24 per euro .
Elsewhere, the Australian dollar briefly touched a two-week top at $0.6773, while a rise in milk prices supported the New Zealand dollar at $0.6196, though moves were tentative ahead of the Fed’s meeting.
Traders say the Fed’s tone as well as the size of the rate cut will drive the reaction in the foreign exchange market.
“A dovish Fed on a substantial easing path should generally lead to a weaker dollar,” said Nathan Swami, head of currency trading at Citi in Singapore.
But an extremely dovish Fed, Swami said, could end up spooking markets if it seems it anticipates a more ominous downturn in the economy than is expected, and in that case risk-sensitive and emerging market currencies, like Naira, may face headwinds.
However, while data from the Nigerian Autonomous Foreign Exchange Market (NAFEM) highlighted that the local currency was sold at N1,656/$1, higher than the N1,546/$1 recorded on Monday, the local currency continued with its poor showing, particularly at the black market segment.
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Presidency Denies Forced Resignation Story
Meanwhile, the presidency has reacted to the report saying President Bola Tinubu has not asked Cardoso to resign from his position as the Governor CBN.
This is according to the Special Adviser to the President on Information and Strategy, Bayo Onanuga, who debunked reports suggesting that Tinubu ordered Cardoso’s resignation.
Taking to his official X handle on Tuesday, the presidential spokesman described the report as a “bundle of lies.”
“It’s all lies. President Tinubu has not asked Yemi Cardoso to resign,” Onanuga said while dismissing the report.
It’s all lies. President Tinubu has not asked Yemi Cardoso to resign. https://t.co/CvSDeu1CUT
— Bayo Onanuga (@aonanuga1956) September 17, 2024
A seasoned economic and development policy advisor, Cardoso was nominated by President Tinubu on September 15, 2023, and assumed office as CBN Governor on September 22, 2023.
He and his deputies were cleared by the National Assembly days before he took over from acting CBN Governor, Folashodun Shonubi.