Emmanuel OchayiThe naira showed strength on Monday, appreciating to N1,650 per dollar in the parallel market, marking a 0.6% gain from Friday’s rate of N1,660.
“This development is a positive sign for the naira as it signals a slight improvement in the local currency’s performance,” said a currency trader in Lagos. “We’ve seen some increased liquidity in the market, which has helped stabilize rates for now.”
Join our WhatsApp ChannelIn the official foreign exchange market, the naira closed at N1,531 per dollar on Friday, reflecting a 1.1% week-on-week appreciation. This was a N17 improvement compared to the previous week’s rate of N1,548, according to Central Bank of Nigeria (CBN) data.
Dollar Weakens After U.S. Policy Speculation
The naira’s improvement comes as the U.S. dollar faced its biggest weekly decline in over a year. The dollar dropped by 1.8% last week, driven by policy uncertainty from the United States.
President Donald Trump, during an interview with Fox News, hinted at a softer approach toward trade tariffs on China. He expressed optimism about resolving trade tensions.
“We have one very big power over China, and that’s tariffs, and they don’t want them,” Trump said. “I’d rather not have to use it, but it’s a tremendous power over China.”
These comments created volatility in global equity markets and impacted the dollar’s strength against a basket of currencies. On Friday, the dollar fell as much as 0.8% but later narrowed its losses to a 0.65% drop by the end of the trading day.
READ ALSO: Inflation: Has The Naira Become Victim Of Policy Missteps?
Economic Experts Weigh In
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), explained how global factors could indirectly impact the naira.
“Trump’s policies, particularly on trade, have had a significant effect on the U.S. dollar. While the short-term impact might weaken the dollar, the longer-term outlook could potentially strengthen it due to increased investment in the U.S. economy,” Yusuf said.
He added, “The rise in U.S. employment and investor confidence could boost the dollar’s value, and if this happens, the naira may face new challenges.”
Market Reactions and Forecasts
Traders in Nigeria’s black market expressed cautious optimism about the naira’s short-term performance.
“This gain is encouraging, but the market is unpredictable,” said another trader in Abuja. “The dollar’s recent decline might help the naira, but we still need to see consistent policies from our government to stabilize the exchange rate.”
In the meantime, the Central Bank of Nigeria continues its efforts to manage foreign exchange liquidity. Analysts suggest that maintaining a stable naira will require improved economic policies and increased foreign investments.
“The naira has shown resilience in the face of global uncertainties,” said Yusuf. “But we must focus on long-term strategies to sustain this progress.”
Global Factors Could Influence Naira’s Future
The naira’s recent gains highlight its sensitivity to both local and global economic developments. As global markets adjust to U.S. trade policies and domestic factors, experts agree that sustained gains will depend on addressing Nigeria’s economic challenges.
“The performance of the naira will always be tied to how well we manage our domestic economy and how we react to external shocks,” Yusuf concluded.
This week’s exchange rates remain closely watched by traders and analysts alike as they assess the naira’s trajectory in the coming days.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
