Naira Hits N1,400/$ Amid Global Tensions: What This Means for Nigeria’s FX Market

The naira traded at N1,401.4 per dollar on Tuesday at Nigeria’s official foreign exchange (FX) market, marking a continued depreciation. Data from the Nigerian Foreign Exchange Market (NFEM) shows the local currency has lost 4.09% in value over the past three weeks, down from N1,346.32 per dollar recorded on February 20.

The naira first crossed the N1,400 per dollar mark on Monday, trading at N1,405.62. This is the first time the currency has reached such levels since January 27, when it traded at N1,401.2 per dollar. At the parallel or black market, the naira also weakened slightly, reaching N1,440 per dollar, up from N1,430 the previous day.

Analysts link the depreciation to ongoing geopolitical tensions involving the United States, Iran, and Israel, which have unsettled global markets. In response, crude oil prices surged to $100 per barrel on Monday — the highest since July 2022 — before easing to $87 on Tuesday. Fluctuations in oil prices are expected to directly influence Nigeria’s foreign exchange liquidity and trade balance.

Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), noted that rising oil prices could strengthen Nigeria’s current account balance and improve FX liquidity. “This could reduce short-term pressure on the naira and reinforce investor confidence,” Yusuf said. However, he also warned that geopolitical instability triggers global risk aversion, which could continue to affect currency stability.

With both global events and domestic trade dynamics at play, the naira’s path remains uncertain. Analysts predict that the currency may either strengthen or weaken depending on Nigeria’s trade balance and investor confidence in the coming weeks. Market watchers are closely monitoring both oil prices and geopolitical developments for cues on the currency’s next move.

source: The cable