The naira faced renewed pressure in the unofficial market this week, fluctuating around the N1,620.25 per dollar support level as the U.S. dollar gained momentum globally.
Traders and importers in Nigeria rushed to acquire dollars amid ongoing demand-side pressures, fueling further depreciation of the local currency.
However, developments in Nigeria’s oil sector have provided a glimmer of hope.
According to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), crude oil output rose to a two-month high in April, reaching 1.486 million barrels per day, up from 1.401 million barrels per day in March.
While still shy of the Organization of the Petroleum Exporting Countries (OPEC) production quota of 1.5 million bpd, the increase signals modest progress for Africa’s top oil producer.
The federal government continues to push forward with its naira-for-crude initiative, designed to limit foreign exchange outflows by encouraging local refining and strengthening the naira.
At a recent technical subcommittee meeting chaired by Coordinating Minister of the Economy Wale Edun, officials reviewed implementation milestones and confirmed that progress targets had been met.
“The in-depth discussions during the last engagement were quite productive,” noted Mohammed Manga, Director of Information and Public Relations at the Ministry of Finance.
Meanwhile, global currency markets were shaken as the dollar surged on Monday following a breakthrough in U.S.-China trade relations.
The two economic giants reached a tentative agreement to reduce tariffs, calming fears of a prolonged trade war.
The United States will slash tariffs on Chinese imports from rates as high as 145% down to 30%, while China has agreed to lower its duties on U.S. goods from 125% to 12% for a 90-day period.
The move exceeded market expectations and lifted investor sentiment.
The dollar index climbed by 1.5%, with the greenback gaining 2.19% against the Japanese yen to reach 148.5, its strongest level since April 3.
Although the dollar remains 2.2% lower than it was at the start of April—when former U.S. President Donald Trump’s tariff policies sowed uncertainty—market optimism is clearly returning.
Analysts are now watching the upcoming U.S. Consumer Price Index (CPI) and retail sales reports, both expected to shape the Federal Reserve’s next interest rate decision.
Market expectations have shifted, with most now forecasting a 25-basis-point rate cut in September, rather than July.
Geopolitical tensions also eased in recent days, with India and Pakistan declaring a ceasefire after four days of heightened hostilities.
Separately, Ukrainian President Volodymyr Zelensky announced a willingness to hold direct talks with Russian President Vladimir Putin, the first such overture since the early days of Russia’s 2022 invasion.
For now, Nigeria’s naira remains under pressure from global forces, but the rebound in oil production and domestic policy moves may offer some relief in the months ahead.
