The Nigerian naira faced renewed volatility in the unofficial market, trading around the ₦1,620.25/$ mark as dollar demand intensified and global currency dynamics shifted. The local currency’s pressure stemmed largely from increased demand among businesses and individuals seeking foreign exchange to fulfill import and consumption needs.
“The naira’s depreciation was driven by demand-side concerns, with individuals and businesses rushing to buy dollars to meet necessities and import obligations.”
Amidst this turbulence, recent developments in Nigeria’s oil sector offer a glimmer of hope for naira stability. April marked the country’s highest crude oil production level in two months, signaling gradual recovery in the sector, though output still fell short of the target set by the Organization of the Petroleum Exporting Countries (OPEC).
“Nigeria’s crude oil production reached a two-month high in April, indicating that the continent’s biggest oil producer made progress toward recovery. It was still below the nation’s official quota, which was set by the Organization of the Petroleum Exporting Countries (OPEC).”
According to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), average daily output rose to 1.486 million barrels in April, up from 1.401 million barrels per day in March.
“Africa’s leading oil producer posted an average output of 1.486 million barrels per day last month, up from 1.401 million bpd in March, according to data released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).”
Though the uptick provides modest relief for naira-backed investors, production remains below the OPEC quota of 1.5 million barrels per day.
“The data brings some relief to naira-denominated investors, though it still isn’t enough to meet the OPEC quota of 1.5 million barrels per day for the same time frame.”
The federal government continues to advocate for the “naira-for-crude” initiative, an effort to use local currency in the sale of crude and refined petroleum products. This measure is intended to address forex shortfalls, bolster domestic refining, and strengthen Nigeria’s fuel security framework.
“The Nigerian federal government remains firm in its stance regarding the advance sale of crude and refined products in naira (naira-for-crude) as part of broader measures to control the crude oil-linked currency deficit, encourage local refining activities, and strengthen the country’s fuel security.”
This initiative was evaluated during a follow-up technical subcommittee meeting in Abuja, chaired by Mr. Wale Edun, Coordinating Minister of the Economy. The government confirmed that all milestone steps from earlier discussions had been successfully met.
“The meeting evaluated execution targets and observed that the in-depth discussions during the last engagement were quite productive. The steps outlined in the milestone were met,” stated Mohammed Manga, Director of Information and Public Relations at the Ministry of Finance.
Global Currency Dynamics: Dollar Gains Momentum
The U.S. dollar surged on Monday after a breakthrough in trade negotiations between the United States and China led to a temporary reduction in tariffs, easing fears of a prolonged trade war.
“The dollar soared on Monday following news that the United States and China reached a tentative agreement to lower tariffs, alleviating fears that a trade war between the two countries could trigger a worldwide recession.”
As part of the agreement:
“The US will reduce its tariffs on imported goods from China, which had been as high as 145% since April, to 30%. In return, China will cut duties on US imports from 125% to 12% for 90 days.”
“This surpasses what investors had anticipated, as most expected a round of discussions with no concrete commitments.”
The dollar index—which measures the greenback against major currencies like the yen and euro—rose 1.5%. The dollar also gained 2.19% against the Japanese yen, touching 148.5, a peak last seen on April 3.
“The dollar index, which compares the greenback’s strength against major currencies, including the yen and euro, increased by 1.5%, with the dollar gaining 2.19% against the Japanese yen, reaching 148.5, a record high since April 3.”
Despite this recent strength, the dollar remains down 2.2% from its April 2 level, when former President Trump’s tariff policy was first unveiled.
“The dollar has strengthened over the past three weeks due to growing optimism over prospective trade deals, though it is still down 2.2% since April 2, the date when Trump announced sweeping tariffs, triggered by his erratic policies and subsequent exemptions that undermined confidence in US assets.”
Investors are closely watching for the release of U.S. Consumer Price Index (CPI) data on Tuesday and April retail sales data on Thursday. These indicators are expected to offer insight into the inflationary impact of trade tensions and may influence the next policy moves by the U.S. Federal Reserve.
“The impending US Consumer Price Index (CPI) data, scheduled for release on Tuesday, and the April retail sales data, which will be disclosed on Thursday, are critical indicators of the impact the global trade conflict has had on the economy and the potential for subsequent interest rate adjustments by the United States Federal Reserve.”
As economic sentiment improves, markets have recalibrated expectations for rate cuts by both the Fed and the European Central Bank. A 25-basis-point cut by the Fed is now forecast for September, rather than July.
“Traders lowered their expectations of rate cuts by the Fed and the European Central Bank as economic prospects improved after the Sino-US trade agreement.”
“Markets now expect the Fed to make its first cut of at least 25 basis points (bps) at its September meeting, in contrast to last week’s July outlook.”
In geopolitical developments, India and Pakistan declared a ceasefire after four days of armed conflict, while Ukraine’s President Volodymyr Zelensky expressed readiness for direct negotiations with Russian President Vladimir Putin—their first potential engagement since early 2022.
“India and Pakistan declared a ceasefire following four days of market-shaking nuclear-powered combat.”
“Ukrainian President Volodymyr Zelensky announced he was ready to speak directly with Russian President Vladimir Putin. The two countries would engage in negotiations for the first time since the early months of Russia’s 2022 invasion.”
