Naira Gains in FX Market Amid U.S. Dollar Risk-on Episode
The Nigerian local currency, the naira, gained against the US dollar at the official window in the absence of significant international payments on Tuesday, according to a daily FX update from the Apex Bank.
In the global forex market, the dollar slumped after President Donald Trump said there was “no going back” on his campaign to take control of Greenland even as he offered talks over the issue that has put the US and its European allies at loggerheads.
A move to safe haven triggered dollar selloffs, while investors locked funds in gold and other precious metals, a move that weakened the greenback.
The US currency fell 0.8 per cent against the euro, while the S&P 500 was down about 1.7 per cent amid increasing transatlantic tensions and threats of a trade war. Analysts told MarketForces Africa that investors are rotating capital away from structured dollar portfolios over fear of retaliation from the EU and UK.
Trading details obtained indicate that the local currency market remains in dollar surplus, supported by a boost from non-bank corporates, exporters and foreign portfolio investors, among other active participants.
The supply side outpaced fx requisitions submitted for foreign payment at the official window. The Naira at the Nigerian Foreign Exchange Market (NFEM) on Tuesday strengthened by 7 bps (94 kobo) against the USD, closing at N1,419.35.
The appreciation was driven by improved supply from local participants as the Naira traded within a range of N1,421 and N1,418.40 per dollar.
Meanwhile, the external reserve continues to improve, adding $49.34 million to previous day’s balance, bringing total reserves to $45.95 trillion.
Analysts said they expect this current level to remain firm in the near term supported by stronger foreign inflows driven by higher oil receipts, improved FPI participation, and consistent CBN FX management.
In the parallel market, the naira slipped 0.02% to N1,481/$. U.S dollar faces sell pressures from trading pairs following President Donald Trump’s move to annex Greenland.
The markets are reacting dramatically to recent developments. President Trump is in Davos and has not relented on his demand for Greenland and he seeks to cajole others into joining the board to oversee the reconstruction of Gaza.
US Treasury Secretary Bessent, who has actively defended the effort to acquire Greenland, even though on two different occasions at least the US has recognised Danish authority, and warns the market is overreacting like it did around ‘Liberation Day” last April.
Oil prices steadied on Monday as civil unrest in Iran subsided, reducing the likelihood of a U.S. attack that could disrupt supplies from the major producer, while market watchers turned their attention to the stand-off over Greenland.
Brent crude edged up by 0.05%, hovering around $64.16 per barrel, while U.S. West Texas Intermediate (WTI) rose slightly by 0.15%, to around $59.43.
However, gold hit record highs on Monday, driven by a flight to safety as Trump imposed new tariffs on 8 major NATO and EU allies over Greenland, starting at 10% and rising to 25% if the US has not acquired Greenland by 1st June 2026.
The EU seems likely to impose retaliatory tariffs on selected imports from the USA, raising the spectre of a trade war. Dollar index fell below 98 on Tuesday as traders saw a shift in structured portfolio away from dollar.
Analysts expect markets to trade cautiously with continued safe-haven demand supporting precious metals and oil prices remaining relatively steady amid geopolitical risk and mixed macro signals.
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