Naira Edges Toward N1,400/$ as Dollar Strengthens

The Nigerian naira traded close to the N1,400 per dollar mark in the official foreign exchange market as the United States dollar gained strength in global markets amid rising geopolitical tensions.

Market data showed the naira closing at N1,399.07 per dollar in the official market, reflecting relatively stable trading conditions despite fluctuations during the session.

Analysts say the currency is gradually moving away from the extreme volatility experienced in previous years as the market enters a consolidation phase.

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Liquidity in the foreign exchange market remained relatively stable, with moderate movements recorded throughout the trading day.

The Central Bank of Nigeria (CBN) continues to operate the willing-buyer, willing-seller foreign exchange framework, a policy designed to improve transparency and limit sharp currency swings that could disrupt economic planning.

The approach has helped keep the official exchange rate close to the N1,400 level in recent trading sessions.

Global developments also influenced currency movements, particularly escalating tensions in the Middle East.

Reports indicated that several vessels were struck by projectiles in or near the Strait of Hormuz, one of the world’s most critical oil shipping routes. One of the ships reportedly caught fire after being hit, forcing the evacuation of crew members.

Additional incidents were reported near the coast of the United Arab Emirates, prompting maritime authorities to advise vessels operating in the region to remain vigilant while investigations continue.

Shipping activities through the strategically important Strait of Hormuz slowed significantly as security concerns intensified.

The geopolitical uncertainty has contributed to renewed demand for the U.S. dollar, traditionally viewed by investors as a safe-haven asset during periods of global instability.

The greenback gained momentum toward the end of the trading session after earlier losing ground, supported by renewed investor demand.

Earlier market volatility followed coordinated airstrikes by the United States and Israel on Iran, which triggered a spike in oil prices and strengthened the dollar.

However, comments from U.S. President Donald Trump suggesting that the conflict could end sooner than expected helped ease market tensions and temporarily weakened the dollar earlier in the session.

Oil prices, which had surged sharply, later declined significantly before recovering again in subsequent trading as investors remained cautious about the evolving geopolitical situation.

The developments also come as global markets prepare for upcoming inflation data from the United States.

The most recent figures showed the U.S. annual inflation rate falling to 2.4 per cent, its lowest level since mid-2025, raising expectations that the Federal Reserve could consider interest rate cuts later in the year.

Market forecasts currently project headline inflation to remain at 2.4 per cent year-on-year, while core inflation is expected to hold around 2.5 per cent.

The Federal Reserve has entered its policy “quiet period” ahead of its upcoming monetary policy meeting, meaning officials will not publicly comment on economic conditions or geopolitical developments.

Analysts say central banks may maintain their current interest rate stance if they view the impact of rising energy prices as temporary.

However, if supply disruptions persist and push inflation higher, policymakers may keep interest rates elevated for longer to maintain price stability.