The Nigerian naira held firm in the parallel market, staying within the N1,600–N1,605 per dollar range, even as the U.S. dollar regained strength globally.Â
The recent rebound in the dollar index, which climbed to 99 after touching a three-year low of 97.8, highlighted a shift in sentiment fueled by geopolitical developments and market expectations. Meanwhile, the naira’s stability continues to defy growing macroeconomic challenges.
Naira Resilience Amid Global Headwinds
Despite mounting pressure from falling oil prices, ongoing trade disputes, and concerns over Nigeria’s widening trade deficit, the naira has remained relatively stable in the unofficial market over the past week. Analysts attribute this steadiness to consistent remittance inflows and improved monetary policy coordination.
However, caution persists. Nigeria’s Central Bank Governor, Yemi Cardoso, emphasized the importance of restoring market confidence through transparency and consistent policy moves. Speaking at an investment forum in New York, Cardoso assured that the apex bank had no intention of reversing its current policy direction. He emphasized that rebuilding confidence in the financial system was a top priority, particularly following Fitch Ratings’ recent upgrade of Nigeria’s outlook from negative to stable. This development is seen as a positive signal for potential foreign investors and international lenders.
Dollar Index Recovers on Trade Optimism and Policy Signals
The U.S. dollar regained upward momentum mid-week following optimistic comments by U.S. Treasury Secretary Scott Bessent, who hinted at potential easing in the U.S.–China trade dispute. In a private discussion, Bessent noted that both countries were aiming to avoid prolonged conflict and were working towards mutual economic stability.
The dollar’s rebound was also aided by reassurance from President Donald Trump, who publicly confirmed that he had no plans to remove Federal Reserve Chair Jerome Powell before the end of his term. This was a significant shift from Trump’s earlier criticism of Powell, in which he threatened action unless interest rates were cut promptly to support growth.
Despite this temporary calm, the president’s history of verbal attacks on the Fed continues to raise concerns about the institution’s independence. Markets remain sensitive to any perceived political interference, which could undermine confidence in U.S. financial leadership and the dollar’s role as the global reserve currency.
Investor Sentiment Mixed as Treasury Markets Weaken
Although the dollar gained traction, the U.S. Treasury market has shown signs of underperformance relative to other developed markets. A recent wave of foreign asset withdrawals, prompted by fears of increased political interference in U.S. monetary policy, contributed to overall market volatility.
Still, U.S. Treasuries remain one of the most sought-after safe-haven assets globally, thanks to their depth, liquidity, and the enduring status of the dollar. Temporary deleveraging may explain the current sell-off, but a more sustained global economic slowdown could once again make the dollar attractive, especially as risk aversion rises.
As global markets grapple with uncertainty, Nigeria’s central bank faces a delicate balancing act—preserving naira stability while managing inflation, maintaining liquidity, and attracting foreign capital.
