Naira strengthens at forex market despite significant drop in dollar supply

The greenback continued its strong comeback against most major financial assets at Wednesday’s trading session in Asia, keeping to its gains recorded on Tuesday. The surge is attributed to the recent impressive economic data coming from the world’s largest economy amid rising concerns over the COVID-19 outbreak in key geopolitical […]

The greenback continued its strong comeback against most major financial assets at Wednesday’s trading session in Asia, keeping to its gains recorded on Tuesday.

The surge is attributed to the recent impressive economic data coming from the world’s largest economy amid rising concerns over the COVID-19 outbreak in key geopolitical zones of Europe.

What you should know; The U.S dollar index that gauges the greenback against a basket of major currencies rose by 0.19% to trade at 94.162 by 9.15 GMT after reaching a two-month high yesterday.

COVID-19 caseloads are also rising in the U.S with the number of deaths in the country now surpassing 200,000 and the number of caseloads reaching 6.9 million as of September 23, according to Johns Hopkins University data.

The U.S. recent economic data revealed that surge to 6 million in August, the highest level in nearly 14 years.

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Quick fact: The U.S. Dollar Index tracks the greenback against a basket of major global currencies such as the Japanese yen, British pound sterling, Swedish Krona, Euro, etc. Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries like Europe, and Japan, would need to pay fewer dollars now in fulfilling such payment obligations.

Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics explained the prevailing indicators pushing the safe-haven currency up,

“The broader markets have a minimal appetite for holding risk, and the dollar continues to trade higher. The AUDUSD is through .7175, the 55-day moving average, and the uptrend from June.

EURUSD is challenging the 1.1680-00 support band that has been held for the past quarter.  Should risk appetite shift higher, look for currencies to follow in lockstep,” he stated.

Currency traders are now adding more bets on the U.S dollar especially against the euro, which looks overvalued.

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