Naira Defies Global Dollar Strength
Nigeria's naira strengthened against the US dollar in both official and parallel markets during the week ending July 25, 2026, even as the greenback rallied globally. The local currency appreciated by N18.09 week-on-week, closing at N1,362.09 per dollar in the Nigerian Foreign Exchange Market (NFEM), according to data from the Central Bank of Nigeria (CBN).
In the parallel market, the naira edged up to N1,407 per dollar from N1,412 a week earlier, reflecting sustained demand for the currency despite international headwinds.
Global Dollar Rally Driven by Fed and Geopolitical Factors
The dollar's strength globally has been fueled by a more hawkish stance from the US Federal Reserve, robust American labour market data, and fresh tariff measures announced by former President Donald Trump that stoked trade tensions. The dollar index hovered near a three-week high of 101.3 on July 25, with rising geopolitical risks involving the US and Iran further boosting safe-haven demand for the greenback.
J.P. Morgan Global Research recently upgraded its dollar outlook, citing these factors. However, the naira's resilience suggests that domestic fundamentals are providing a buffer.
Domestic Liquidity and Record Reserves Support Naira
Several domestic factors have underpinned the naira's stability. Total turnover at the NFEM window surged 119.9% during the week, reaching $4.2 billion on Thursday, up from $2.01 billion on Monday. Deal volumes also increased, rising from 1,216 to 1,348 transactions.
In the interbank segment, turnover grew 51.3% to $1.43 billion on Friday from $944.16 million at the start of the week. CBN Governor Olayemi Cardoso, speaking after the Monetary Policy Committee meeting, disclosed that Nigeria's external reserves climbed to $52.52 billion as of July 17, up from $50.47 billion at the end of May. He attributed the rise to oil-related tax receipts and third-party inflows. The reserves now provide approximately 11 months of import cover, well above the recommended three-month minimum.
Expert View: Dollar Strength Temporary
According to a BusinessDay report, Manpreet Gill, chief investment officer for Africa, Middle East and Europe at Standard Chartered, described the current dollar strength as largely temporary. "Our view is that both of those factors should gradually fade. Assuming inflation continues to moderate, and there are no significant new shocks, we expect US bond yields to ease over time, reducing support for the dollar," Gill said.
He noted that prolonged dollar strength raises import costs and discourages capital flows into emerging markets, while a more stable dollar would benefit currencies like the naira.
Outlook Hinges on Reforms and Global Conditions
Analysts suggest the naira's near-term trajectory will depend on the sustainability of CBN's exchange rate reforms, continued growth in external reserves, and a supportive global environment. The currency's resilience this week signals growing confidence in Nigeria's foreign exchange management, but risks from external shocks remain.
