US Dollar Plummets to Lowest Level in Four Years
The global financial landscape has witnessed a significant shift as the US dollar has crashed to its lowest level in four years. This dramatic decline, which began with a 1.3% drop against a basket of major currencies on Tuesday, has continued into Wednesday, marking the currency's weakest position since February 2022. Over the past year, the dollar has depreciated by approximately 10%, creating ripple effects across international markets.
Global Currency Movements and Investor Response
The dollar's weakness has prompted investors to move funds into traditional safe-haven assets. Gold has continued its impressive rally, hitting fresh record highs above $5,200 per ounce. The precious metal has surged nearly 90% since President Donald Trump's second inauguration just over a year ago, as investors seek protection from ongoing political and economic uncertainty.
Other major currencies have also benefited from the dollar's decline. The Swiss franc has risen to its strongest level against the dollar in more than a decade, gaining about 3% so far this year following a 14% rise in 2025. Meanwhile, the euro has surged to $1.20, climbing roughly 2% in the past week for its biggest weekly gain since April last year.
Naira's Mixed Performance in Currency Markets
In Nigeria, the naira has shown a mixed performance in response to these global currency movements. According to Central Bank of Nigeria data, the Nigerian currency strengthened slightly against the US dollar in the official market, appreciating to N1,400.28 per dollar at the Nigerian Foreign Exchange Market (NAFEM) on Wednesday, January 28. This represents a gain of 74 kobo or 0.05% from the previous session's close of N1,401.22/$1.
However, the naira faced pressure against other major currencies. It depreciated by N4.15 against the pound sterling to close at N1,929.99/£1, and lost N3.31 against the euro to settle at N1,675.53/€1 in the official market. In parallel market trading, the naira remained stable at N1,480/$1, while it closed flat at N1,426/$1 at the GTBank forex desk.
Political and Economic Context
President Donald Trump has dismissed concerns about the dollar's slide, stating during a visit to Iowa that he considers the currency's performance to be "great" and pointing to strong business activity as evidence. Market strategist Steve Sosnick of Interactive Brokers offered a more nuanced perspective, noting that "a weaker dollar is a two-sided coin" that benefits multinational companies with foreign-currency revenues while potentially raising import costs and fueling inflationary pressures.
Nigeria's Improving External Position
Amid these currency fluctuations, Nigeria's economic fundamentals show positive signs. Data from the Central Bank of Nigeria reveals that gross foreign reserves climbed to $46.012 billion as of January 22, 2026. This represents the highest level recorded in approximately eight years, marking an increase of roughly $510 million since the start of the year. The last time reserves reached this level was in August 2018, highlighting a notable turnaround in Nigeria's external position.
The combination of a weakening US dollar and strengthening Nigerian foreign reserves creates a complex but potentially favorable environment for Nigeria's currency management and economic planning in the coming months.
