The USD to NGN exchange rate has recently experienced notable fluctuations, primarily influenced by a mix of local and international factors. Analysts have reported that the recent USD is trading at 90-day lows near 1461 NGN, which is approximately 3.4% below its three-month average of 1512 NGN. This stability, within a 5.3% range of 1461 to 1539 NGN, reflects the underlying uncertainties that continue to impact both the US dollar and the Nigerian naira.
Key developments affecting the US dollar include ongoing tensions in US-China trade relations, which create volatility in the currency market. A recent statement from President Trump seemed to reduce some tariff-related jitters, but the market remains cautious. Federal Reserve Chair Jerome Powell’s upcoming remarks may significantly influence trader sentiment, particularly if they lean hawkish, potentially boosting the dollar against other currencies.
On the Nigerian side, the naira is under pressure due to a suspension of petrol sales by Dangote Refinery, which could necessitate sourcing fuel in dollars. This development may weaken the naira further, particularly in conjunction with the projections from the African Development Bank forecasting a 6% depreciation of the naira through 2026. The International Monetary Fund's recent report did highlight improvements in Nigeria's macroeconomic stability, yet high food prices remain a burden for households, underscoring the ongoing economic challenges.
Moreover, oil prices are currently trading at $63.32, which is 6.0% below the three-month average of $67.35. Given that Nigeria is heavily dependent on oil revenue, these prices indirectly affect the naira. The volatility in oil prices, trading in a wide 17.1% range from $62.66 to $73.37, poses additional risks to both the naira's valuation and Nigeria's broader economic outlook.
Overall, traders anticipating the USD to NGN exchange rate should pay attention to the evolving geopolitical climate, as well as domestic economic reforms in Nigeria that may influence currency strength moving forward. It's advisable to monitor the Federal Reserve’s upcoming decisions on interest rates and inflation, along with any further updates on US-China trade negotiations, as these will undoubtedly shape market dynamics in the near term.
