The Nigerian naira continued its struggle in the unofficial market, trading below the ₦1,550/$ mark, as demand for the U.S. dollar remained firm. Despite an increase in the Central Bank of Nigeria’s (CBN) foreign exchange holdings, the local currency has been unable to break the ₦1,200 resistance line.
Nigeria’s crude oil production remains stagnant, limiting the impact of recent efforts by the CBN to stabilize the volatile FX market. Rising demand for foreign exchange, particularly for tuition fees, international travel, and fuel imports, continues to exert pressure on the naira.
Market analysts have also pointed to delays in finalizing the naira-for-crude agreement between the Nigerian National Petroleum Company Limited (NNPCL) and Dangote Refineries as a major challenge. The deal, which allows local refiners to purchase crude oil in naira instead of U.S. dollars, was expected to ease FX pressures and support the naira. However, negotiations have been postponed for a few more weeks, raising concerns about its impact on forex supply and inflation control.
Despite these challenges, Nigeria’s net foreign exchange reserves have reached $23.1 billion in 2024, marking the highest level in over three years. This represents a significant improvement from $3.99 billion at the end of 2023, reflecting stronger external liquidity and renewed investor confidence.
On the global stage, the U.S. dollar held steady during the London trading session as investors braced for President Donald Trump’s upcoming tariff announcement. The White House is set to unveil new trade policies that could significantly impact global markets.
The U.S. Dollar Index remained around 104.20, with little movement despite recent weak economic data from the United States. The euro was last seen trading at $1.078, while the pound eased to $1.29 ahead of Trump’s scheduled speech in the White House Rose Garden.
Reports suggest that Trump’s team is considering a sweeping tariff plan that could raise duties by 20%-25% on imports from almost every major trading partner. If implemented, such a move could trigger a strong risk-off sentiment in global markets and fuel trade war concerns.
Meanwhile, a series of weaker-than-expected U.S. economic indicators—including a drop in job openings and a weak ISM manufacturing PMI—have raised recession fears, putting the dollar in an uncertain position. Traders will be closely watching upcoming economic data releases for further clues on the dollar’s trajectory.
As global markets react to these developments, the Nigerian naira remains vulnerable to both domestic and international factors, making the coming weeks crucial for its stability.
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