Naira slips near 2025 lows as demand for Dollar surges

The Nigerian naira continued to weaken against the U.S. dollar this week, hovering near its 2025 lows, as renewed appetite for the greenback intensified across markets.

Heightened demand from individuals and corporates—driven by import obligations and essential currency needs—fueled further pressure on the local unit despite ongoing reforms by the Central Bank of Nigeria (CBN).

On the parallel market, unofficial data showed the naira trading between N1625 and N1630 per dollar on Friday. On the official market, the currency closed at N1608/$1, marginally firmer than Thursday’s N1612/$1 close, though still reflecting sustained weakness over recent sessions.

Market analysts point to a prolonged bearish outlook for the naira, underpinned by both domestic economic headwinds and a globally strengthening U.S. dollar. Throughout the week, the naira posted consistent depreciation across four trading sessions at the regulated foreign exchange window.

Meanwhile, the U.S. Dollar Index (DXY) surged to a near one-month high around the 100.8 level, its third straight week of gains, signaling the onset of a broader bullish consolidation phase.

The index, which tracks the greenback against a basket of major currencies, is benefiting from easing global trade tensions and renewed investor confidence in the U.S. economy.

Federal Reserve Chair Jerome Powell reiterated that the Fed will maintain its cautious stance on interest rate cuts due to prevailing uncertainty around global trade tariffs. This reinforces expectations that the U.S. will keep rates elevated in the near term, making the dollar an attractive safe-haven asset.

Boosting the dollar’s rally further was the announcement of a historic trade agreement between the United States and the United Kingdom, the first of its kind since the Trump-era tariffs. Under the deal:

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The U.S. will reduce automobile tariffs from 25% to 10% for British vehicles.

The UK will grant broader market access to American agricultural products, including beef and ethanol.

British Prime Minister Keir Starmer hailed the agreement as a major boost for the UK’s steel and automotive industries, while former U.S. President Donald Trump—involved in negotiating the deal—suggested further tariff reductions could be on the horizon, including with China and the EU.

Trump also hinted at productive trade talks with China and the European Union, scheduled this weekend in Switzerland, raising expectations for a more open Chinese market and a potential easing of global trade frictions.

These global uncertainties are reinforcing the dollar’s appeal as a safe-haven asset, while currency traders remain cautious about emerging market currencies like the naira, which continue to face structural and fiscal constraints.

As market forces converge, analysts warn that unless there is a dramatic improvement in Nigeria’s FX liquidity, reserves, or export earnings, the naira may continue to test new lows in the months ahead.