Currency stability persists despite global tensions, with investors eyeing key ₦1,400/$ threshold….
The naira opened the week on a relatively steady note in the official market, trading within the ₦1,382 to ₦1,500 range at the Nigerian Foreign Exchange Market (NFEM), in what analysts see as a sign of short-term stability.
So far in March, the local currency has largely maintained a narrow band between ₦1,352/$ and ₦1,398/$. Market watchers say a decisive break above the ₦1,400/$ level could trigger a gradual move toward ₦1,450/$, depending on prevailing liquidity conditions.
Early trading data showed the naira exchanging at an average of ₦1,382.18 to the dollar, slightly stronger than the ₦1,384.25 recorded at the close of trading last Friday. The marginal 0.15 percent appreciation reflects cautious optimism as markets enter the final stretch of the quarter.
A key factor underpinning this relative calm is improved liquidity at the official window, supported by the Central Bank of Nigeria’s enhanced Electronic Foreign Exchange Matching System (EFEMS). The platform has helped streamline transactions and improve transparency in FX trading, contributing to better price discovery.
Turnover at the official market stood at about $172.9 million in the last full trading session of the previous week, reinforcing confidence that supply conditions are gradually improving.
Nigeria’s external reserves, now hovering close to the $50 billion mark, have also strengthened the central bank’s ability to intervene when necessary. This marks a notable recovery from the lows recorded in 2024 and provides a buffer against sudden currency volatility.
Adding to the support, global oil prices remain elevated, with Bonny Light crude trading above $103 per barrel. The sustained rally continues to boost foreign exchange inflows, offering additional backing for the naira.
On the domestic front, easing inflation has further improved sentiment. Headline inflation recently slowed to 15.06 percent, while the Monetary Policy Rate (MPR) has remained steady at 26.5 percent. Together, these factors are helping to sustain investor interest in naira-denominated assets.
In a further boost to confidence, the International Monetary Fund (IMF) recently upgraded Nigeria’s economic outlook, projecting GDP growth of 4.4 percent in 2026. The improved outlook, driven in part by gains in ICT and services, is seen as reinforcing a baseline level of support for the currency.
However, global developments continue to pose risks. The US dollar has strengthened significantly, climbing toward a 10-month high and posting its strongest monthly performance since mid-last year. The rally has been fueled by geopolitical uncertainty, particularly tensions involving Iran.
Mixed signals from Washington and Tehran have kept markets on edge, especially as developments in the Middle East disrupted oil supply routes. The temporary shutdown of the Strait of Hormuz, a critical passage for roughly one-fifth of global oil and gas shipments sent shockwaves through energy markets.
As a result, Brent crude prices surged, while the dollar benefited from its traditional safe-haven appeal. Higher oil prices, while supportive for oil-exporting countries like Nigeria, have weighed on major import-dependent economies such as Japan and parts of Europe.
For now, the naira appears to be holding its ground, supported by stronger fundamentals and improved liquidity. But analysts caution that maintaining this stability will depend on sustained FX inflows, disciplined monetary policy, and how global risks evolve in the coming weeks.
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