Nigeria’s currency has slipped further against the United States dollar, crossing the N1,400 threshold at the official foreign exchange market amid growing uncertainty in global markets.
Data from the Nigerian Foreign Exchange Market (NFEM), the country’s official FX window, showed that the naira traded at N1,401.4 per dollar on Tuesday, marking a notable decline from recent levels. The figure represents a 4.09 percent depreciation over the past three weeks compared with N1,346.32/$ recorded on February 20.
The weakening trend had already become evident earlier in the week. On Monday, the naira exchanged at N1,405.62 per dollar, pushing the currency past the N1,400 mark for the first time in weeks. The last time the exchange rate hovered around that level was January 27, when the local currency traded at N1,401.2/$.
Parallel Market Also Shows Decline
The pressure on the naira was also visible in the parallel market, where the currency depreciated by 0.70 percent. It traded at N1,440 per dollar on Tuesday, compared with N1,430 per dollar on Monday, widening the gap between the official and unofficial FX markets.
Global Tensions Stir Market Volatility
The latest movement in the currency market comes as geopolitical tensions involving the United States, Iran, and Israel continue to unsettle global financial markets.
One of the immediate impacts has been a surge in crude oil prices. On Monday, oil prices climbed to $100 per barrel, the highest level since mid-2022, before easing to around $87 per barrel on Tuesday as markets reacted to the unfolding situation.
Oil Price Movements Could Influence Naira
Economic analysts note that fluctuations in global oil prices could significantly influence Nigeria’s foreign exchange outlook.
According to Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), rising oil prices often improve Nigeria’s external position.
Higher crude prices, he explained, can strengthen the country’s current account balance and boost foreign exchange inflows.
“This could reduce short-term pressure on the naira and reinforce investor confidence,” Yusuf said.
However, he also warned that geopolitical instability typically triggers global risk aversion, prompting investors to move funds into safer assets and potentially adding volatility to emerging market currencies like the naira.
Market watchers say the direction of the naira in the coming weeks will likely depend on oil price stability, investor sentiment, and Nigeria’s trade balance.