The Nigerian naira has reached its strongest position in the unofficial market in 2025, buoyed by improved market fundamentals and ongoing reforms from the Central Bank of Nigeria. In the early hours of Tuesday, the naira was quoted at N1,520/$ in Nigeria’s business capital, marking a significant surge. This price action reflects heightened participation in the Nigerian stock market despite a decline in Treasury bill yields and increased incentives for naira-denominated investments.
Furthermore, the Central Bank of Nigeria’s (CBN) sale of foreign exchange to Bureau De Change (BDC) operators, coupled with a reduction in foreign exchange demand, has provided enough support for the naira bulls to break through the N1,500/$ support line. This marks a rare period of stability for the Nigerian currency, one year after its sharp fall against the US dollar.
Since the relaxation of foreign exchange controls in 2023, the naira lost 70% of its value against the US dollar. However, the Nigerian central bank has implemented various forex interventions and policy measures, such as tightening regulations for BDC operators and boosting dollar liquidity in the official market, to stabilize the naira’s value. CBN Governor, Olayemi Cardoso, has stated that violations of the recently introduced Nigeria Foreign Exchange (FX) Code will have severe consequences, reinforcing the CBN’s commitment to ethical practices and transparency in the country’s forex market.
In global trade news, the U.S. Dollar Index, which measures the greenback’s strength against a basket of six major currencies, rose above 108 index points as currency traders reacted to mixed economic data and new tariff concerns. Traders are also closely watching Federal Reserve Chairman Jerome Powell’s upcoming testimony before Congress for hints about future interest rate policies.
President Donald Trump’s announcement of a 25% tariff on all steel and aluminum imports from Monday also boosted the dollar, while concerns over new trade restrictions led to declines in the Canadian dollar, Japanese yen, euro, and British pound. The dollar index climbed to 108.31, up by 0.21%. Prime Minister Keir Starmer’s spokesperson noted that the UK government would continue to engage with the Trump administration regarding the proposed tariffs.
The CME FedWatch Tool currently indicates a 90% chance that the Fed will keep interest rates unchanged during its March 19 meeting. Additionally, the US 10-year yield has bounced back from its annual low, rising to 4.50%. Markets are watching Powell’s testimony for indications of any future monetary policy adjustments. Investors are also awaiting January’s consumer price inflation data, expected to show a 0.3% monthly increase in both headline and core consumer prices, marking an annual gain of 2% and 3%, respectively.
