Despite significant fluctuation in the dollar index after President Trump’s inauguration, the naira held steady versus the haven currency in the unofficial market, staying between N1660-7.
As holders and speculators increasingly hedge on the dollar, price activity indicates that naira bulls have little motivation to breach below the N1500/$ resistance line.
One year after President Tinubu took office, the value of the naira fell sharply, indicating an uncommon period of stability for the local currency.
Taiwo Oyedele, the head of the Presidential Committee on Fiscal Policy and Tax Reforms, has claimed that the primary cause of stress in Nigeria’s foreign exchange market is, in reality, illicit demand.
“The illicit demand for foreign exchange is Nigeria’s biggest problem, not the supply of foreign exchange,” Oyedele said at The Covenant Nation’s Platform Economic Outlook for 2025 event.
“The impact of that discretionary demand increases with the extent of corruption. Even in the private sector, it is taking place. Although most Nigerians have never seen a dollar banknote, members of the elite, high-net-worth individuals, super-rich people, and a segment of the middle class have. The belief that the value of the naira will decline is a self-fulfilling prophecy. All of your savings are being converted to US dollars. Over the past 18 months, the balance of domiciliary accounts has grown by over $6 billion. There is more than $30 billion remaining.”
Olayemi Cardoso, the governor of the CBN, also offered a comprehensive plan for halting the naira’s commoditisation and re-establishing it as a legitimate currency for the country.
Over the weekend in Lagos, the committee of heads of bank operations had their first-ever conference on “The Way Forward: Naira Commoditisation.”
The lives of regular Nigerians who utilize the naira for transactions and the economy intertwined with the banking industry are seriously threatened by the commoditization of the currency, as Cardoso noted.
He emphasized that the dignity of the national unit is deconstructed when the naira becomes a capital-tradable asset with fluctuating value instead of a medium of exchange for commodities and services of economic worth.
He argued that the naira is an essential component of Nigerian identity, not merely a piece of money. But lately, the naira has been viewed less as money and more as a commodity.
Dollar Gains Strength Under President Donald Trump
- Amid a tumultuous trading session, President Donald Trump gave the dollar some boost by hinting that the US may soon put tariffs on Canada and Mexico.
- The dollar index saw its biggest daily fall since late 2023, recovering 0.6% to 108.65 index points after dropping 1.2 percent overnight.
- No other details were supplied, but it was claimed that Trump’s team was considering a 25% tax that may be announced on February 1.
- The comments were surprising because officials had previously stated that any new taxes would be implemented “measured” way, which would have significantly benefited currencies that were subject to trade. The memo directed agencies to investigate and resolve persistent trade deficits.
- Market participants expected Trump to start with China, enacting 10–20% tariffs on goods before progressively raising them.
