Dollar falls after U.S. inflation report

The U.S. dollar experienced a sharp drop in value on Wednesday after the release of data showing that consumer prices in March rose less than what economists had expected.

– Key points to note

The dollar index fell 0.41% on the day below the level of around 102.11 before the data was released, according to Reuters.

The euro reached $1.09900, the highest it has been since February 2, and was last at $1.0967, up 0.48% on the day. The dollar dipped to 133.04 Japanese yen, from around 133.85 before the data was released.

In Nigeria, the dollar closed at 462.88 to a dollar on Tuesday at the official market. At the parallel market in Abuja, a trader told Pluboard he would buy a dollar at N737 on Wednesday.

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The fall in U.S. consumer prices has raised expectations that the Federal Reserve, the equivalent of the central bank, may halt interest rate hikes after a possible increase in May. Interest rates hikes drove demand for the dollar as investors hunted U.S. securities.

The Consumer Price Index (CPI), which measures inflation, climbed 0.1% last month; economists had predicted a 0.2% gain. This is down from a 0.4% increase in February.

Core inflation, which excludes the volatile food and energy components, increased by 0.4% last month after rising by 0.5% in February.

This unexpected drop in inflation has led some analysts to suggest that the Fed could raise interest rate in May and no more.

Reuters quoted Joe Manimbo, senior market analyst at Convera in Washington, D.C., as saying that, “Headline inflation coming down more than expected is backing the view of the Fed being basically one more and done.”