Dollar Crashes Again as Naira Fights Back Strong

The Nigerian Naira strengthened to N1,365 against the U.S. dollar on Thursday, showing a notable gain as the dollar experienced a general decline in the global market.

According to data from the Central Bank of Nigeria (CBN), the local currency improved from a rate of N1,369/$ recorded the previous day, indicating a positive shift in market sentiment.

This appreciation of the Naira occurs as the U.S. dollar is on track for its most significant weekly drop since January, influenced by growing optimism surrounding a potential ceasefire in the Gulf and a resumption of oil shipments.

The future movement of the Naira will likely depend on the outcomes of ongoing diplomatic discussions between the United States and Iran taking place in Islamabad.

The naira’s appreciation aligns with a broader weakening of the U.S. dollar across global markets.

The U.S. dollar index has fallen by 1.3% this week as investors unwind safe-haven positions following the ceasefire agreement.

The naira closed at N1,365/$ on Thursday, trading within a range of N1,351.5/$ to N1,365/$, with an average rate of N1,359.9/$.

Nigeria’s external reserves declined to $48.89 billion, down from $49.18 billion at the start of April, continuing a downward trend since mid-March.

Major currencies gained against the dollar, with the euro trading at $1.1690, while the Australian and New Zealand dollars posted weekly gains of nearly 3%.

The weakening dollar reflects easing geopolitical tensions and expectations of improved oil supply flows through the Strait of Hormuz.

The dollar had strengthened significantly in March as geopolitical tensions in the Middle East triggered a flight to safety among investors.

The U.S.-Israel conflict with Iran drove oil prices higher, pressured global equities, and increased inflation concerns.

Investors shifted to the dollar as a safe-haven asset, boosting its value against major currencies.
Since the ceasefire agreement earlier in the week, these positions have begun to unwind, leading to a broad-based dollar decline.

Despite the ceasefire, uncertainty remains, as shipping activity through the Strait of Hormuz is still below normal levels, with only a few vessels passing through compared to about 140 ships daily before the conflict.