Naira Strengthens Slightly as Dollar Hits Over Three-Year Low Globally

July 2, 2025 – The Nigerian naira recorded a slight improvement in the official foreign exchange market on Tuesday, strengthening to N1,527 per dollar from N1,532 on Monday, according to data from the Central Bank of Nigeria (CBN).

The gain of N5 comes at a time when the US dollar dipped to its lowest level globally since February 2022.

The naira’s performance coincides with a drop in Nigeria’s external reserves, which declined by $3.05 billion in the first half of the year. As of the end of June, the reserves stood at $37.37 billion, down from $40.88 billion at the end of 2024.

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However, in the parallel market, the naira weakened, trading at N1,585 per dollar on Tuesday, compared to N1,570 on Monday. The disparity between the official and parallel market rates continues to reflect ongoing pressure in Nigeria’s foreign exchange environment.

Rising debt costs also remain a concern. Nigeria’s public debt stock increased by N27.72 trillion over the past year, reaching N149.39 trillion by March 2025. The weakening naira has contributed to a higher valuation of foreign currency-denominated debt. The Debt Management Office reported that total public debt rose by 22.8% year-on-year from N121.67 trillion.

In response to fiscal pressures, President Bola Tinubu recently approved four new tax laws designed to increase revenue generation and attract investors, while the federal government has also ramped up the use of concessionaire financing and public-private partnerships to reduce dependence on external loans.

On the global scene, the US dollar weakened as market participants reacted to dovish comments by Federal Reserve Chair Jerome Powell. Speaking at the European Central Bank’s forum in Portugal, Powell signaled a cautious approach to interest rate decisions, hinting at the possibility of a rate cut depending on economic data.

The dollar index, which tracks the greenback’s performance against six major currencies, briefly rose to 96.744 but remained close to its overnight low of 96.373. The dollar also approached multi-year lows against the euro and Swiss franc.

Traders are also closely watching developments in the United States, particularly a proposed tax-and-spending package backed by former President Donald Trump. The plan, which analysts say could add $3.3 trillion to the national debt, has introduced additional uncertainty. Trump’s recent criticism of Powell and suggestions for lower interest rates have further weighed on the dollar’s performance in the currency markets.