The naira has come under renewed pressure in Nigeria’s foreign exchange market, slipping to N1,385 per US dollar as escalating conflict in the Middle East sends shockwaves through global financial systems.
After showing relative stability at around N1,360, the local currency has depreciated roughly 0.3 per cent over the past fortnight, reflecting heightened investor anxiety amid surging oil prices and energy market uncertainty.
Nigeria’s position as a leading crude exporter has offered some buffer against global market turbulence, but domestic consumers are beginning to feel the impact. The naira’s depreciation coincides with a sharp rise in local energy costs, with gasoline prices jumping more than 30 per cent since the outbreak of conflict in the Middle East.
Despite inflation easing slightly to 15.06 per cent in February, analysts warn that rising transportation and energy costs could soon drive broader price increases, threatening recent gains achieved by the Central Bank of Nigeria (CBN).
Matthew Anthony, Senior Market Analyst for Africa at ForexTime Limited, said on Tuesday, “As these tensions escalate, mounting fears of inflationary shocks could force central banks to rethink their 2026 playbooks.”
The global backdrop remains volatile. Brent crude surged above $103 a barrel on Tuesday, driven by attacks on energy infrastructure in the Middle East and ongoing disruptions to shipping through the Strait of Hormuz. In response, the International Energy Agency released 400 million barrels from strategic reserves—the largest release in its history—while the US issued a second temporary waiver for Russian oil purchases. Despite these efforts, oil prices have remained firmly above triple digits.
The ripple effects are being felt globally. On Tuesday, the Reserve Bank of Australia raised interest rates for the second consecutive meeting, signalling tighter monetary policy amid energy-related inflation concerns. Investors are now closely watching the Federal Reserve, European Central Bank, and Bank of England for guidance, with market expectations for US rate cuts in 2026 largely evaporated.
Anthony noted, “Ultimately, this has injected oil prices with monstrous levels of volatility… Iran’s attacks on energy infrastructure around the Middle East have intensified fears around supply shocks.”
For Nigeria, the immediate concern is the CBN’s policy stance. The recent spike in gasoline prices and the naira’s decline may compel the apex bank to halt planned interest rate cuts and adopt a more defensive posture to curb conflict-driven inflation.
“The brief tech rally in the previous session merely served as a small distraction, with equities on the back foot amid overall caution,” the report concluded, highlighting a challenging week ahead for Nigerian policymakers navigating global market turbulence.
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