Nigerian Naira Opens Strong as Foreign Reserves Top $49bn
The Nigerian naira opened the month of May slightly stronger as foreign reserves continue to climb again, following fresh inflows from hydrocarbon sales and offshore investors’ portfolio building.
Data from the Nigeria foreign exchange market (NFEM) showed the local currency closed at `N1,373.25/US$1 in May from N1,374.9431/US$1 in April close.
In the parallel market, the rate appreciated by 0.36% or N5.00/US$1, settling at N1,390.00/US$1 from N1,395.00/US$1 in the previous week.
As a result, the spread between the two rates narrowed to N16.75/US$1 from N19.54/US$1 in the prior week. The Central Bank’s gross external reserves rose by US$451.09 million w/w to US$49.34 billion.
In the near term, the Naira is expected to trade within a relatively stable range, supported by sustained foreign inflows and broader participation following the recently revised FX manual, which introduces greater market flexibility and eases several prior restrictions.
Elsewhere, crude oil prices declined sharply last week as easing geopolitical tensions in the Middle East reduced concerns over potential supply disruptions.
Brent crude shed 9.86% w/w to close at US$94.87/bbl from US$105.25/bbl in the previous week. Despite the decline, Brent’s year-to-date return remains strong at 55.91%, while the year-to-date average price stands at US$89.53/bbl.
The decline was primarily driven by reports of progress in diplomatic engagements between the United States and Iran, which helped alleviate fears of a prolonged disruption to global oil supplies.
Market sentiment was further supported by signs of stabilisation in shipping activity through the Strait of Hormuz, reducing concerns over continued disruptions to one of the world’s most critical energy transit routes.
Despite the pullback in prices, geopolitical risks remain elevated. While improving diplomatic engagement between the U.S. and Iran has eased immediate supply concerns, uncertainty persists over the durability of any agreement and the pace of normalisation in oil flows through the Strait of Hormuz.
Consequently, the market remains highly sensitive to news of any developments in the Middle East and their implications for global crude supply.
Analysts expect oil prices to remain volatile as investors monitor developments in U.S.-Iran negotiations, shipping activity through the Strait of Hormuz, and broader global supply dynamics.
While easing tensions may continue to exert downward pressure on prices, any setback in diplomatic efforts could quickly reignite supply concerns and support higher crude prices. Oil Prices Surge as US-Iran Attacks Heighten Uncertainties
