Naira Holds Steady in Black Market as U.S. Dollar Weakens Amid Global Uncertainty

The Nigerian naira remained stable in the black market, trading just below the N1.550/$ range in the first session of September, supported by increased inflows of foreign currency and a weakening U.S. dollar. The local currency closed August on a bullish note at 1,531.57/$ in the Nigerian Foreign Exchange Market, reflecting growing confidence among traders.

The recent stability of the naira is largely attributed to a surge in remittances from the Nigerian diaspora and stronger foreign portfolio investments (FPI). According to the Central Bank of Nigeria (CBN), external reserves rose by $1.72 billion to $41.3 billion, giving the bank greater leverage to maintain exchange rate stability. CBN Governor Yemi Cardoso highlighted that diaspora remittances surged by 200% to $600 million over the last two months, bolstering liquidity in the forex market.

Foreign investment inflows have also contributed to the naira’s stability, rising from $1.5 billion in June to $1.7 billion in July. Analysts note that improved exchange rates and accessible remittance channels have reduced the reliance on alternative methods of transferring funds abroad. PwC’s recent Economic Outlook forecast further supports a broadly stable naira for the remainder of 2025, aided by CBN reforms and sustained portfolio inflows.

Meanwhile, the U.S. dollar weakened slightly, trading lower against major global currencies as investors awaited upcoming U.S. labor market data. The Dollar Index, which tracks the greenback against six major currencies, slipped after four consecutive sessions of losses. Market watchers are closely analyzing U.S. inflation reports, tariff rulings, and labor statistics to gauge potential interest rate adjustments by the Federal Reserve later this month.

Experts warn that while the naira is expected to remain mostly stable in official and parallel markets, rising demand for dollars and potential shifts in global macroeconomic conditions could limit further gains. With continued support from the CBN and sustained foreign inflows, traders anticipate a cautious but positive outlook for the naira in the coming weeks.

Source: Nairametrics