The naira lost value against the dollar at both official and parallel foreign exchange markets on Wednesday, for the first time since last week.
The naira declined to N1,620 against the dollar on Wednesday from N1,605 exchanged in the parallel market on Tuesday.
In the same manner, the Naira depreciated marginally at the NAFEM rate to N1,599.79 per dollar on Wednesday from N1,598.95 exchanged on Tuesday, and closed at N1,599 per dollar from N1,604 on Tuesday, based on data from the Central Bank of Nigeria.
Foreign exchange market operators remain optimistic despite this slight dip in exchange rates. There was an inflow of $847 million through the NAFEM window, above last week’s $795 million.
Increased demand pressure on the naira, from initial market tensions, was relieved by ongoing sales of crude oil to domestic refineries in naira, re-implemented in the last few days.
Trade conflicts between China and the United States have affected the crude oil market, which has a positive correlation with the outlook of the naira, negatively.
Crude oil prices are currently trading $10 below the Federal Government’s benchmark, and have been projected by analysts to reach the $50 and $55 level in 2025/2026. This will directly affect the naira, with the commodity accounting for about 90% of Forex earnings.
America has threatened, imposed, and then postponed tariffs repeatedly. This tariff uncertainty has undermined the dollar, making the forex markets volatile. The euro and yen have both gained approximately 5% against the dollar in just over two weeks. The naira also gained after the announcement of tariff halt, but lost earlier from its imposition, where Nigeria was slammed with a 14% tariff.
The U.S. Dollar Index has a bearish outlook, trading close to the 99.5 support level as of Thursday.
Fresh downward pressure on the U.S. dollar (USD) today sent the euro and British pound to multi-month highs
Trump’s tariffs have pressured the greenback, depleting U.S. financial influence worldwide and adding to political and economic uncertainty.
