The Nigerian naira is at its strongest level in the unofficial market this year amid improved market fundamentals and ongoing reforms by the Central Bank of Nigeria.
The naira buying price in the black market was quoted at N1,520/$ in the early hours of Tuesday in Nigeria’s business capital.
The price action highlighted increased participation in the Nigerian stock market despite a drop in Treasury bill yields and increased incentives for naira-denominated investments.
In addition, the CBN’s FX sale to BDC operators amid a drop in FX demand provided Naira bulls with enough ammunition to breach the N1,500/$ support line.
The Nigerian currency is experiencing a rare period of stability, one year after a precipitous decline against the dollar.
The naira lost 70% of its value against the US dollar since authorities loosened foreign exchange controls in 2023.
However, the Nigerian apex bank has enacted several forex interventions and policy measures to boost the naira’s value, such as strengthening rules for Bureau De Change operators and boosting dollar liquidity in the official market.
CBN Governor, Olayemi Cardoso, declared that there would be harsh consequences for any violations of the recently introduced Nigeria Foreign Exchange (FX) Code. He reaffirmed the Central Bank’s commitment to upholding ethical behavior and transparency in Nigeria’s foreign exchange market.
U.S. Dollar Index Affirms Dollar Strength Amid Disruptions in Global Trade
The US Dollar Index, which compares the greenback’s strength to a basket of six major currencies, traded above 108 index points as currency traders responded to conflicting economic data and new tariff concerns.
- Market players are also focusing on Jerome Powell, the chair of the Federal Reserve, who will testify before Congress for direction on future interest rate policy.
- U.S. President Donald Trump’s promise of 25% tariffs on all steel and aluminum imports boosted the dollar on Monday. Meanwhile, worries about the effects of new trade restrictions caused the Canadian dollar, Japanese yen, euro, and sterling to decline.
- Data from the American Iron and Steel Institute and the government indicate that Canada is a significant exporter of aluminum and steel to the United States. Japanese Prime Minister Shigeru Ishiba expressed optimism that his country could avoid higher trade tariffs, claiming that Trump had acknowledged Japan’s significant investment in the U.S. and the jobs it generates in America.
Trump declared on Sunday that he would impose 25% tariffs on all imports of aluminum and steel into the United States, in addition to current metals duties. This followed his announcement on Friday that he would impose reciprocal tariffs on numerous nations by Monday or Tuesday.
- The dollar index increased to 108.31, up 0.21%. Prime Minister Keir Starmer’s spokesperson stated on Monday that the government would continue to engage with the Trump administration as needed regarding President Donald Trump’s proposed steel and aluminum tariffs.
- The CME FedWatch Tool highlighted a 90% chance that interest rates wouldn’t change at the Fed’s meeting on March 19. The US 10-year yield has recovered from its annual low last week, rising to 4.50%. In anticipation of Powell’s testimony on Tuesday, markets are watching for clues about potential changes to interest rates and monetary policy.
The January consumer price inflation data due on Wednesday will be the main economic focus in the world’s largest economy. It is anticipated to reveal that last month’s headline and core consumer prices increased by 0.3% and 3%, respectively, for an annual gain of 2% and 3%.
