The Nigerian currency ended the first trading session of the week on a positive note amid increased appetite for the haven currency in the global currency market.
The naira settled at N1,531.2/$1 in Nigeria’s official foreign exchange market, appreciating by 0.37% from Friday’s close of N1,537/$1.
However, market action showed that naira volatility has been relatively higher amid elevated uncertainty in the Nigerian economy.
CBN’s data showed the local currency ranged between N1,480/$ and N1,600/$ in the past few weeks. The naira’s recent volatility reflects the ongoing struggle between monetary policy and market forces, despite the CBN’s future actions to ensure a more stable foreign exchange environment.
Nigeria’s heavy reliance on fossil fuels for foreign exchange earnings has amplified selling pressure on the naira amid rising trade tensions between the U.S. and major trading partners, which indirectly hurt energy consumption and limited the naira’s potential upsides.
The Bureau De Change Operators of Nigeria claims that the naira’s volatility has been elevated amid trade wars, pressures on the exchange rate, and speculative attacks. Pressure on the local currency persists despite the Central Bank of Nigeria’s efforts to increase the amount of foreign exchange available to banks and Bureau De Change operators. Experts caution that these measures, although potentially providing temporary respite, do not address the underlying problems facing Nigeria’s forex market.
U.S. Dollar Maintains Haven Status After Trump’s Change in Tariffs Strategy
The dollar was relatively bullish in the global currency market amid a high appetite for risk. The U.S. Dollar Index has now recorded a four-day winning streak.
- President Donald Trump stated that certain nations might receive exemptions from some of his threatened levies, which would not all be implemented on April 2. This improved the dollar and the mood on Wall Street overnight by allaying concerns about a potential slowdown in American growth.
- The U.S. president revoked the license that allowed the American oil giant Chevron to operate in Venezuela and is increasing the number of migrants being expelled from that country.
- S&P Global’s flash U.S. PMI data showed a high services component, which raised U.S. yields and correlated with Japan’s downturn, where manufacturing and services were contracting.
- However, it is uncertain what will happen next because Trump has promised to implement auto tariffs, and worries about American growth make the market effects of the levies more complicated. For the first time since October, traders were net bearish on the U.S. dollar last week, according to a statement released by the Commodity Futures Trading Commission on Friday.
The Trump administration does not intend to announce separate sectoral tariffs. “Other existing tariffs, such as on steel and aluminum, may not be cumulative, mitigating the potential impact on those sectors,” as suggested last week by Treasury Secretary Scott Bessent.
Raphael Bostic, president of the Atlanta Fed, highlighted the continued uncertainty, saying that inflation progress might be slower than anticipated. The Fed’s sentiment index has sharply risen above hawkish territory on the DXY’s daily chart, further strengthening the greenback. Bostic lowered his expectations for a rate cut in 2025. He noted the potential impact of U.S. trade tensions on monetary policy decisions, raising concerns based on ongoing price pressure and trade-related risks.
The Commodity Futures Trading Commission data released last Friday indicated that although U.S. currency trade positions were nearly neutral, speculators became net bearish on the U.S. dollar last week for the first time since October.
