Latest Forex Market Updates with Verto

Developed Markets: Trump’s Inauguration and the Dollar’s Trajectory

The inauguration of President Trump has been a major focus over recent weeks, with markets keeping a close eye on potential trade tariff announcements. Contrary to expectations, there were no immediate moves on tariffs on day one, easing some tensions in both G10 and EMFX markets.

As a result, the dollar’s recent appreciation has slightly reversed. The Euro, which hit lows of 1.02 last week, and the GBP, trading around 1.20, have both rebounded. While markets brace for future tariff moves, the lack of a dramatic "day one" policy shift has provided some relief, particularly for emerging markets.

FX dynamics and inflation reweighting in Nigeria

Nigeria remains a hotspot for market dynamics. 

The electronic matching system introduced in December created initial excitement and strengthened the naira, but rates have since shifted. The parallel market is now at 1650, with further movement to 1700 likely. Despite an increased supply of dollars in the official market, the 7–8% spread between the two markets raises questions.

The Central Bank of Nigeria (CBN) is also reweighting its CPI basket, removing certain food items, which is expected to lower inflation figures. Governor Cardoso suggests these effects will be transitory, but the reduced need for aggressive monetary tightening could ease policy shifts.

Nigeria's potential as an emerging market superpower also continues to grow, with China remaining a key investment partner. Renewed agreements between the two nations could boost dollar inflows.

Kenya market holds stability amid inflation adjustments

Kenya's FX market has remained remarkably stable over the past nine months, bolstered by ample dollar supply and tight spreads (just $0.10 today).

This week's reweighting of Kenya’s CPI basket may influence inflation, though significant shifts are unlikely. Should rates break above 130, it will be worth watching how the Central Bank of Kenya (CBK) adjusts its monetary policy to maintain stability.

Volatility continues in Tanzania

December brought an extraordinary 10–15% appreciation in Tanzania’s FX market, but this reversed sharply heading into January. Liquidity remains unpredictable, and market rates have returned to 2700–2750, levels last seen in November.

This volatility appears unrelated to central bank intervention, underscoring the challenge of managing dollar supply in-country.

XAF & XOF: stability with room for change

The West and Central African currencies (XOF and XAF) have been relatively stable, with XOF trading 50 basis points above the peg and XAF around 2% above the peg in parallel markets. However, euro liquidity challenges could widen spreads further. For now, the region remains steady, but the situation warrants close monitoring.

Looking Ahead

As the global economy adjusts to new political and economic realities, FX markets across developed and emerging economies are facing unique challenges. From the impact of U.S. trade policy to localized inflation adjustments in Africa, staying informed will be crucial for navigating this evolving landscape.

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