The naira has weakened against the dollar due to Trump’s tariff turmoil and downturn in global oil prices, prompting uncertainty in investment strategy among holders of naira assets.
However, analysts suggest the depreciation remains within expected bounds for economies with similar profiles and anticipate a stabilization in the near term.
“I think the 5-7% depreciation of the naira is in line with other currencies of similar economies. If we were falling beyond where other markets have, then maybe a concern would exist,” Zeal Akaraiwe, CEO at Graeme Blaque Advisory, said.
Also, according to Reuters, the Nigerian and Ghanaian currencies are expected to be broadly stable from next week to Thursday, thanks to central bank support, while the Ugandan and Zambian currencies could fall, traders said.
It said that Nigeria’s naira is seen holding steady as central bank dollar sales counteract pressure from foreign investors trying to pull their money to safe havens because of U.S. President Donald Trump’s changing tariff policies.
The naira was quoted around 1,620 to the dollar in intraday trading on Thursday, compared with a closing quote of 1,530 naira a week earlier. The unit was sold at 1,620 naira to the dollar in street trading on Thursday.
Data from the Central Bank of Nigeria (CBN) showed the naira depreciated by N35.77 on the official NFEM between Wednesday and Friday, settling at N1,567.02 per dollar (from N1,531.25 on April 2nd). In response to renewed pressure linked to the US tariffs and the oil price decline, the CBN injected approximately $550 million into the official market last week.
This prompted JP Morgan to reverse its positive stance on Nigerian OMO bills last week. The firm now forecasts that a sustained decline in oil prices below $60 could push the USD/NGN rate above N1700, leading to greater losses on its recent OMO bill 03/03/26 trade than exiting now at a less favorable N1590.
However, JP Morgan mentioned that when compared to its peers as well as more liquid markets, the naira’s 3.6% move against the dollar over the past week has been reasonable.
Akaraiwe said that the Nigerian market has demonstrated that there’s liquidity, and for FPIs that want to exit, they can at the prevailing price.
“Their price sensitivity is very low because if you consider those that came in a year ago, around $/N1600 and earned a 25% yield, their breakeven would be N2,000/$.”
“Paying N50 premium to exit is a no-brainer for them, especially coming fresh from the last few years. “That’s why the parallel market didn’t react quickly – the demand has no access to that,” Akaraiwe said.
Yesterday, CBN announced that the country recorded a Balance of Payments (BOP) surplus of $6.83 billion for the 2024 financial year, from deficits of $3.34 billion in 2023 and $3.32 billion in 2022.
Nevertheless, the global bank remains confident of the Nigerian economy in the medium term.
“As we wrote last week, before the tariff carnage, we believe Nigeria will stay the course on its reform journey, especially after implementing the more politically difficult measures of eliminating fuel subsidies and allowing the exchange rate to depreciate as well as become more flexible over the last 18 months,” JP Morgan analysts noted.
“ We think the changes at the state oil company, NNPC, would bear fruit in the medium term, as oil proceeds should now flow more freely into the fiscal accounts, via the central bank,” the analysts said.
