Naira Appreciates as Central Bank Releases New Official Exchange Rate
The Nigerian naira demonstrated renewed strength against the United States dollar in the official foreign exchange market on Tuesday, with the Central Bank of Nigeria (CBN) releasing updated exchange rate figures that reflect the currency's recovery. According to the daily foreign exchange update from the apex bank, the naira appreciated by 7 basis points, equivalent to 94 kobo, to close at N1,419.35 per dollar at the Nigerian Foreign Exchange Market (NFEM).
Improved Dollar Supply Drives Naira's Recovery
Market operators attributed the naira's appreciation to significantly improved dollar supply from multiple sources, including non-bank corporate entities, exporters, and foreign portfolio investors. Trading data revealed that the currency exchanged within a narrow band of N1,421 to N1,418.40, indicating steady liquidity conditions throughout the trading session. The increased dollar inflow notably outpaced foreign exchange requests submitted for international payments, creating favorable conditions for the local currency's recovery.
External reserves continued their upward trajectory, rising by $49.34 million to reach $45.95 billion, further bolstering confidence in near-term foreign exchange stability. Financial analysts anticipate the naira will maintain relative firmness in the short term, supported by higher oil receipts, improved foreign portfolio investment inflows, and consistent foreign exchange management policies implemented by the Central Bank of Nigeria.
Global Market Dynamics Influence Currency Movements
The naira's modest gain coincided with renewed weakness in the US dollar on global forex markets, triggered by escalating geopolitical tensions involving former President Donald Trump's renewed push to acquire Greenland. The greenback faced substantial pressure after Trump declared there was "no going back" on his Greenland campaign, a stance that has strained relations between the United States and its European allies.
As investors shifted toward safe-haven assets, the dollar declined 0.8 percent against the euro, while the S&P 500 index fell approximately 1.7 percent. Analysts at MarketForces Africa noted that capital is rotating out of structured dollar portfolios amid growing fears of retaliatory measures from the European Union and the United Kingdom.
Mixed Performance Across Different Market Segments
While the official market witnessed naira appreciation, the parallel market presented a contrasting picture with the currency weakening slightly by 0.02 percent to trade around N1,481 per dollar. This divergence reflects lingering speculative pressures and highlights the complex dynamics operating within Nigeria's foreign exchange ecosystem.
In commodities markets, oil prices steadied as civil unrest in Iran eased, reducing concerns about potential supply disruptions from the major producer. Brent crude inched up 0.05 percent to approximately $64.16 per barrel, while US West Texas Intermediate rose 0.15 percent to about $59.43 per barrel.
Gold surged to record highs as investors sought safety following Trump's imposition of new tariffs on eight major NATO and European Union allies over the Greenland dispute. The tariffs begin at 10 percent and could escalate to 25 percent if the United States fails to acquire Greenland by June 1, 2026.
Cautious Market Outlook Ahead
Financial analysts expect markets to trade cautiously in the coming weeks, with safe-haven demand continuing to support precious metals, oil prices remaining relatively stable, and emerging market currencies like the naira reacting closely to global risk sentiment and capital flow patterns. The dollar index fell below 98 on Tuesday, reflecting sustained selling pressure as markets brace for potential European Union retaliation and a wider trade war.
This recovery follows Monday's depreciation when the naira weakened against major foreign currencies in the official market, pressured by stronger demand and limited dollar supply in the absence of visible intervention by the Central Bank of Nigeria. Data from the Nigerian Foreign Exchange Market showed the naira fell by N2.33, or 0.16 percent, to close at N1,420.28 per dollar compared with N1,417.95 recorded in the previous session.
