The Nigerian naira has surged to its strongest level in the unofficial market this year, fueled by improved market fundamentals and the Central Bank of Nigeria’s (CBN) ongoing reforms.
As of early Tuesday, the black market exchange rate stood at N1,520 per dollar in Lagos, Nigeria’s business capital. This price movement shows rising investor confidence in naira-denominated assets, despite lower Treasury bill yields. The CBN’s strategic foreign exchange interventions, including its FX sales to Bureau De Change (BDC) operators, have also contributed to the naira’s bullish momentum, helping it breach the crucial N1,500 per dollar support line.
This newfound stability is a remarkable turnaround for the naira, which had suffered a staggering 70% depreciation against the US dollar following the deregulation of foreign exchange controls in 2023. However, the CBN has since introduced several policy measures to restore confidence in the currency. These include stricter regulations for BDC operators and a significant boost in dollar liquidity within the official forex market.
CBN Governor Olayemi Cardoso has warned against any violations of the newly introduced Nigeria Foreign Exchange (FX) Code, emphasizing the central bank’s commitment to ethical practices and transparency in currency trading. The proactive stance by the CBN is seen as a game-changer, ensuring a more stable and predictable forex market.
Meanwhile, global currency markets are experiencing heightened volatility, with the US Dollar Index climbing above 108 points as traders react to mixed economic data and fresh tariff concerns. Investors are closely monitoring US Federal Reserve Chair Jerome Powell’s upcoming testimony before Congress for signals on future interest rate policies. Additionally, President Donald Trump’s announcement of a 25% tariff on all steel and aluminium imports has strengthened the dollar while pressuring other major currencies, including the Canadian dollar, Japanese yen, euro, and British pound.
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Japan’s Prime Minister Shigeru Ishiba remains optimistic that his country can negotiate favourable trade terms with the US, citing Japan’s substantial investments in American industries and job creation. Meanwhile, British Prime Minister Keir Starmer’s office has assured that ongoing discussions with Washington will address any potential trade disruptions stemming from Trump’s tariff policies.
On Wall Street, traders are closely watching economic indicators, particularly the upcoming US Consumer Price Inflation (CPI) report set for release on Wednesday. Projections suggest that core consumer prices may have risen by 0.3% in January, translating to an annual increase of 3%. With inflationary pressures and Federal Reserve policy under scrutiny, global financial markets remain on edge as investors brace for the next wave of economic data.
The naira’s current momentum suggests a shift in market sentiment, with analysts predicting continued stability if the CBN sustains its forex interventions and regulatory oversight. As Nigeria’s economic landscape evolves, all eyes remain on the apex bank’s next move in steering the naira towards long-term strength and resilience.
