Naira Exposes US Dollar Funds, Investment to Fluctuation Risk
With a positive outlook on the Nigerian naira in 2025, sustained exchange rate appreciation has exposed dollar funds to fluctuation risk, MarketForces Africa gathered from investment banking sources.
Structured US dollar investments with fixed interest rates would be worth less than anticipated due to the recent naira gaining streaks, some analysts explained.
However, they noted that investors are safe if they have no intention to convert their foreign currency-denominated dollar account to local currency.
To protect wealth from exposure to naira volatility and inflation pressures, investment banking firms had launched a series of dollar funds with fixed interest rates.
But Nigeria’s inflation rate has continued its downward trend, and the local currency has appreciated till it breached the psychological barrier of N1,500 per US dollar in the third quarter.
The nation’s gross external reserves and FX inflows outlook remain positive, helping the naira to trade at N1465 per dollar this week. In spite of crude oil price fluctuation, the external reserves continued to rise, settling at $42.407 billion as of October 2, 2025.
Data from the Central Bank of Nigeria (CBN) confirmed that gross external reserves surged by about $5.2 billion since the first-half print of $37.21 billion.Recall that most of the dollar funds opened by investors were priced at an exchange rate of N1550-N1600.
“If some investors were to liquidate positions this week, they might have lost at least N100 per dollar invested,” an investment analyst who preferred not to be mentioned told MarketForces Africa.
He added that interest income on dollar-priced investment funds would, however, have positive effects on risk reduction.Looking forward, the market anticipates the naira to continue to appreciate against the dollar amidst broader depreciation of the US dollar index at the global forex markets. #Naira Exposes US Dollar Funds, Investment to Fluctuation Risk#
Domestic Gas Key to Nigeria’s Prosperity, Seplat Energy Says
