Naira Faces Setback After Brief Gains, Now at N1,510/$ on Black Market

The Nigerian naira opened Tuesday’s trading session at N1,510 per dollar on the black market, reflecting renewed pressure despite a weakened U.S. dollar index. However, in the official Nigerian Foreign Exchange Market, the naira showed slight improvement. According to CBN data, the indicative exchange rate dropped from N1,500/$ last Friday to settle at N1,499/$ on Monday.

The local currency, which had recorded three days of appreciation last week, faced a setback, reflecting ongoing fluctuations in the forex market. In the official window, the naira closed at N1,498.98/$, losing N6.49 from Friday’s rate of N1,492.49/$, marking a 0.43% decline.

The CBN Governor has reiterated that maintaining naira stability remains a top priority. The apex bank continues its interventions in the foreign exchange market while promoting transparency and liquidity. Recent reforms, including the Nigerian Foreign Exchange Market FX Code and the Electronic Foreign Exchange Matching System, have enhanced market efficiency, curbing volatility and speculation.

The U.S. dollar index faced downward pressure due to a surprise dip in American consumer spending and rising geopolitical risks. Investors were unsettled by heightened tensions between President Donald Trump and Ukrainian President Volodymyr Zelensky after their canceled press conference. Trump’s warning—“You are gambling on World War III, but you don’t have any cards in right now”—sparked a rush toward safe-haven assets.

Meanwhile, diplomatic friction between the U.S. and Ukraine escalated after a rare earth supply deal collapsed. This development raised concerns about potential retaliation from China, the dominant player in rare earth production. Analysts fear new trade tensions, especially after Trump’s tariffs on China, Canada, and Mexico came into effect.

The dollar index posted its sharpest monthly decline since September, closing February with a 1% loss. Traders are increasingly betting on a U.S. Federal Reserve rate cut in June, despite a slight uptick in the 10-year Treasury yield, which now hovers above 4.20%. While higher yields typically support the U.S. dollar, shifting expectations about Fed policy have created market uncertainty. Investors are closely watching policymakers’ signals on interest rate adjustments in the coming months.