Naira Slips to N1,375/$ as Dollar Strengthens on Middle East Tensions and Global Uncertainty

The naira recorded a mild depreciation on Monday, closing at N1,375 per dollar in the official foreign exchange market. The drop reflects renewed pressure on emerging market currencies as global investors react to rising geopolitical tensions in the Middle East and shifting dollar demand.

According to data released by the Central Bank of Nigeria (CBN), the local currency weakened from N1,364/$ on Friday. This movement comes as the U.S. dollar remains relatively strong, supported by safe-haven demand amid fears that prolonged conflict in the Middle East could keep global inflation elevated and delay interest rate cuts.

Intraday trading during the session showed fluctuations between N1,367/$ and N1,375/$, with an average rate of N1,372.98/$. Market turnover in the Nigerian Foreign Exchange Market (NFEM) also dropped to $51.17 million across 67 deals, compared to $78.15 million in 91 deals recorded in the previous session, signaling slightly reduced liquidity.

Global oil prices added another layer of pressure and opportunity to the market. Brent crude climbed to $104.55 per barrel, while U.S. West Texas Intermediate traded around $98.17, as investors weighed potential supply disruptions linked to Middle East tensions. While higher oil prices can boost Nigeria’s export earnings, they also raise concerns about imported inflation and domestic fuel costs.

Looking ahead, attention is shifting to upcoming U.S. inflation data and Federal Reserve policy direction, which could further influence global dollar strength. Analysts warn that sustained high U.S. interest rates may continue to put pressure on the naira. Meanwhile, Nigeria’s external reserves have also declined by about $855 million in five weeks, though the Central Bank of Nigeria remains optimistic, projecting reserves could reach $51 billion by the end of 2026 under its stabilization plans.

source: nairametrics