- Nigeria’s naira came under renewed pressure, as declining oil prices reduced forex earnings and weakened foreign reserves
- The changes in global oil prices limited the Central Bank’s ability to support the currency in the forex market
- Analysts warn of lower fiscal revenue and called for the need to shield Nigeria’s oil-dependent economy from external shocks
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Pressure on the naira deepened in the foreign exchange market amid renewed trade tensions between the United States and China which triggered drop in oil prices.
The benchmark Brent crude price slid 15.5% month-on-month to close at $63.12 per barrel in April 2025.
Photo credit: Bloomberg/contributor
Source: Getty Images
According to investment firm Afrinvest the firm stated in its latest market report noted that Nigeria, which relies heavily on crude oil exports for foreign exchange earnings, the price slump spells further trouble.
Afrinvest analyst said:
““April was a volatile month in the oil market as global trade tensions from Trump’s ‘liberation day’ tariff policy shook the energy market.
“Despite Trump exempting oil from tariff policy, the market reacted negatively, largely due to China (the world’s largest oil importer) engaging in back-and-forth trade wars with the US.”
Afrinvest also added that the impact of weaker oil prices could significantly affect Nigeria’s macroeconomic position.
It stated:
“The benchmark Brent crude oil price fell 15.5 per cent m/m to close at $63.12/bbl. (the biggest monthly drop in over three years.”
Analysts say the continuous decline in crude prices may reduce Nigeria’s external reserves and restrict the Central Bank of Nigeria’s capacity to defend the local currency, Punch reports.
They also warn that the impact could filter into the broader economy through weakened fiscal revenues and lower investor confidence.
Photo credit: CBN
Source: Getty Images
Naira to dollar exchange rates
The naira has continued to struggle across both the official and parallel markets, with traders attributing the weakness to increased dollar demand and declining forex inflows.
At the end of last week data from the CBN showed that at the Nigerian Foreign Exchange Market (NFEM), the naira closed at N1,606 per dollar at the end of trading on Friday, April 4.
Friday’s exchange rate is a 0.24% depreciation for the naira when compared to the previous day’s closing rate of N1,602 recorded in the official market.
The CBN revealed that intra-day trading fluctuated between a high of N1,606.5/$1 and a low of N1,600/$1 on Friday..
This compares to Thursday’s intra-day high and low of N1,603.5/$1 and N1,580./$1, respectively, reflecting minimal volatility and a narrow trading band.
In the parallel market, also known as the black market, it was the same story for the naira against the US dollar.
Traders continue to quote one dollar above N1,600.
World Bank praises CBN governor Yemi Cardoso’s policies on naira
Earlier, Legit.ng reported that Indermit Gill the Vice President and Chief Economist of World Bank, has supported Central Bank Governor Olayemi Cardoso’s foreign exchange policy.
The global bank believes that the policy is a crucial step for Nigeria’s economic recovery and considers it the right approach.
Gill also commended the CBN governor for his approach to managing inflation, pointing out that increasing interest rates was the right direction.
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Source: Legit.ng
