Naira Holds at N1,361/$ as Dollar Strengthens on Strong U.S. Jobs Data and Fed Outlook Pressure

The Nigerian naira maintained a relatively stable position against the U.S. dollar, settling around N1,361/$ in midweek trading as the foreign exchange market continued to reflect tight central bank management and global currency pressures. The stability comes amid ongoing intervention by the Central Bank of Nigeria (CBN), which has remained active in defending the naira through direct dollar sales to Bureau De Change operators and commercial banks.

Market analysts note that this controlled stability is largely supported by Nigeria’s external reserves, which currently stand at about $50 billion, providing close to nine months of import cover. This buffer has strengthened the CBN’s ability to manage volatility, curb speculative trading, and maintain a relatively narrow trading range between N1,350 and N1,360 in the official market.

To further stabilize liquidity, the CBN has maintained a strict monetary tightening stance, including a 45% Cash Reserve Ratio (CRR) and elevated interest rates aimed at draining excess naira supply from the banking system. While these measures help control inflation and support the currency, they also highlight the delicate balance policymakers must maintain between stability and economic growth.

Despite official market calm, pressure persists in the parallel market due to corporate demand for foreign exchange, even as progress continues in clearing FX backlogs owed to airlines and foreign investors. At the same time, investor interest in naira-denominated assets such as treasury bills and money market instruments has helped reinforce demand for the local currency in recent months.

Globally, the U.S. dollar remains strong, driven by better-than-expected economic data, including a surge in Nonfarm Payrolls that nearly doubled forecasts. The Dollar Index (DXY) is holding near the 100 level, as expectations of aggressive Federal Reserve rate cuts fade. With inflation data still elevated and upcoming CPI and PPI reports in focus, analysts say further dollar strength could continue to influence emerging market currencies, including the naira.

source: nairametrics