Nigeria’s currency, the naira, is set to cross an important psychological and technical hurdle in the official market, as its journey towards the N1,500 to the dollar threshold is watched very closely by market players.
The naira closed last Friday at N1,528 per US dollar, bringing the gap to below N30 before it reached the critical level. This low-key but tenacious rebound is but one facet of a wider wave of hope. It sweeps through the foreign exchange market in Nigeria, fueled by indigenous reform as well as cross-border market flows.
Rebound foreign spending on naira-denominated debit cards is perhaps one of the most staggering trends to underpin the resilience of the naira. Other major banks like Guaranty Trust Bank, United Bank for Africa, Wema Bank, and Stanbic IBTC have also followed suit by introducing cross-border consumption by their customers. The new regulations allow GTBank customers, for example, to spend a quarter at a time up to $1,000 on their naira cards. The limit includes as much as $500 foreign cash withdrawals from ATMs and $500 worth of e-commerce or point-of-sale transactions.
UBA also chimed in, informing its customers that all of the bands of its Premium Naira Cards—World, Platinum, and Gold—are now international-enabled. It is a sign of growing confidence in Nigeria’s FX regime and that the banks are getting more confident at processing foreign currency transactions, which means FX liquidity may be gathering speed.
The same optimism has also been noted by the International Monetary Fund, which issued uncalculated appreciation for the Central Bank of Nigeria’s monetary contractionary policy in its 2025 Article IV report. The IMF stated that policies of CBN were among the vanguards in ending inflation and macroeconomy stabilization. It also praised the apex bank for attempting to stop deficit monetization, which had fueled inflationary pressures over the past years.
In its recent Monetary Policy Committee (MPC) meeting in May, CBN left the Monetary Policy Rate (MPR) at 27.5 percent and Cash Reserve Ratio at 50 percent for merchant banks and commercial banks and 16 percent for merchant banks. These are tight conditions as by the disinflation target.
On the international front, the US dollar was softly edged out after its short-lived rally. The Dollar Index, measuring the dollar against a basket of six major world currencies, dropped 0.2 percent to 96.605 on Friday. Even when as good as the US jobs number temporarily boosted the currency, investor attention once more turned to rising trade tensions and soon-to-be-announced tariffs by the US administration. With policy risks against trade piling up, the near-term direction of the dollar can remain uncertain.
Simultaneously, there is still open dialogue within the European Central Bank, wherein regulators cut rates for an eighth year in a row. ECB policymakers are in what could be timeout now, in the wake of weak-than-projected German industrial orders that have cast new uncertainty over the economic tempo of the eurozone. The EUR/USD currency pair appreciated by 0.1 percent to 1.1774, as the euro to rise by 0.5 percent for the week.
Locally, the domestic naira is on a shaky but optimistic path. With policy convergence, prudent optimism worldwide, and a growing active banking environment, the domestic currency could be poised to keep growing, perhaps even shatter the N1,500 ceiling if the prevailing trends are permitted to take their course.
