Dollar pressure eases as Naira trades firm at N1,375/$

The Nigerian currency, the naira, strengthened slightly and traded at N1,375 per US dollar in the foreign exchange market.

Experts say the market is currently stable because of a mix of government policies and trading activities. The exchange rate has been moving within a narrow range, showing that there is less pressure on the naira for now.

One major level traders are watching is N1,350/$, which is seen as an important psychological point for the market.

A key reason behind the naira’s recent performance is the Central Bank of Nigeria (CBN)’s decision to maintain tight monetary policies instead of making major changes.

At its 305th Monetary Policy Committee (MPC) meeting, the CBN decided to keep the Monetary Policy Rate (MPR) at 26.5%.

Although inflation had reduced earlier in the year, it increased slightly again in April to 15.69%, mainly because of rising global energy costs and supply chain disruptions linked to tensions in the Middle East. Because of this, the CBN decided not to lower interest rates yet.

Nigeria’s external reserves also remain strong at about $49 billion, enough to cover nearly nine months of imports. This gives the CBN more ability to support the naira and reduce sharp movements in the exchange rate.

The Cash Reserve Ratio (CRR) remains high at 45%, meaning banks must keep a large portion of their funds with the CBN. This reduces excess naira in circulation and limits speculation against the dollar.

US Dollar Gains Globally

Meanwhile, the US Dollar Index, which measures the strength of the US dollar against major global currencies, rose slightly to 99.1.

Demand for the dollar increased because investors moved toward safer assets amid uncertainty over possible peace talks involving the United States and Iran.

Reports about military tensions and ongoing negotiations around the Strait of Hormuz have kept markets cautious.

Oil prices have also dropped in recent days as traders expect lower geopolitical risks. Brent crude oil fell below $100 per barrel, easing concerns about global inflation.

Overall, analysts believe the naira is benefiting from tighter monetary policy, stronger reserves, and improving market confidence, although global developments remain important factors to watch.