The naira broke above the N1,500/$ support level, momentarily hitting N1,497/$ at the official exchange market.
This reflects the naira’s continued recovery trajectory, supported by the Central Bank’s interventions and improved dollar liquidity in the market.
According to the Central Bank of Nigeria’s latest data, the naira appreciated to close at ₦1,506.0850 per dollar, bolstered by increased dollar supply in the official market.
The naira maintained a tight trading range between ₦1,497.00 and ₦1,509.50 during the session, showcasing improved market stability and reduced volatility.
External Reserves Growth Signals Economic Strengthening
Nigeria’s gross external reserves experienced a notable increase of $33.27 million from the previous day, reaching $41.57 billion as of September 8, 2025.
This upward trajectory in reserves provides crucial backing for the naira’s performance and demonstrates the effectiveness of current monetary policies in building foreign exchange buffers.
With the naira projected to close 2025 between N1,580 and N1,600 per dollar, recent market developments suggest a more optimistic outlook for the local currency.
The naira is likely to maintain its steady performance amid rising external reserves, despite ongoing price fluctuations in global commodity markets.
Euro Weakens Against Naira Amid European Crisis
The naira capitalized on socio-economic challenges in France, strengthening against the Euro in a notable cross-currency movement.
The euro/naira exchange rate improved to N1,765/€ in the official market on Tuesday, compared to N1,775/€ recorded the previous week, highlighting the naira’s broader strength beyond its dollar peg.
Federal Reserve Rate Cut Expectations Impact Dollar Dynamics
Gold extended its record-setting performance, climbing 0.2% to $3,643.57 after touching a historic high of $3,673.95, supported by expectations of a September Federal Reserve rate cut.
Markets are closely watching the Fed’s upcoming meeting, where a rate cut is widely anticipated, potentially creating favorable conditions for emerging market currencies.
U.S. Inflation Data to Shape Fed Policy Direction
The U.S. dollar remained stable as investors await key inflation reports, including the consumer price index scheduled for Thursday release following Wednesday’s producer price index.
The dollar index is expected to fall by roughly 10% by 2025 since America’s trade policies and rate-cutting expectations have restricted the dollar’s upside.
Markets have fully priced in a 25-basis-point cut next week, with only a 5% probability of a 50-basis-point reduction, expecting total easing of 66 basis points this year.
Market Outlook
The EUR/USD pair tested levels below 1.17 after reversing from multi-week highs near 1.1780, reflecting broader dollar dynamics that could influence naira performance.
The combination of improved external reserves, stable oil prices, and potential Fed rate cuts creates a supportive environment for the naira’s continued recovery in the coming months.
