The Nigerian naira remained under pressure in the parallel market, trading around N1,620.25/$ as demand for the U.S. dollar continued to rise despite a modest improvement in the country’s crude oil output.
According to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigeria’s oil production climbed to 1.486 million barrels per day in April 2025, up from 1.401 million in March. While this two-month high reflects some recovery in Africa’s largest oil-producing economy, it still falls short of the 1.5 million barrels per day quota set by the Organization of the Petroleum Exporting Countries (OPEC).
The pressure on the naira is largely attributed to rising demand from importers and individuals seeking foreign exchange amid limited supply, both in the official and black markets.
Dollar Strength Gains Momentum
Meanwhile, the U.S. dollar saw a surge in global markets after a breakthrough in trade negotiations between the United States and China. Both countries agreed to reduce tariffs significantly for a 90-day period, easing fears of a prolonged trade war that had rattled financial markets worldwide.
As a result, the dollar index rose by 1.5%, with notable gains against major currencies such as the Japanese yen, where it climbed to 148.5—its highest level since early April. This resurgence has complicated efforts by emerging markets like Nigeria to stabilize their currencies.
Local Policy Measures and Oil Prospects
In an effort to cushion the impact of currency volatility, the Nigerian federal government continues to promote the sale of crude and refined products in naira—a strategy aimed at conserving foreign exchange and supporting local refining. The initiative was recently reviewed at a follow-up meeting in Abuja chaired by Wale Edun, Coordinating Minister of the Economy, where officials affirmed progress toward execution targets.
Mohammed Manga, spokesperson for the Ministry of Finance, noted that the initiative aims to curb the foreign currency deficit linked to crude oil sales and promote domestic energy security.
Global Outlook and Naira Implications
As the U.S. Federal Reserve prepares to release key inflation and retail sales data this week, global markets are recalibrating expectations for interest rate movements. Traders now anticipate the Fed’s first rate cut in September, rather than July, as previously expected.
These developments, along with easing geopolitical tensions—such as ceasefires in South Asia and preliminary talks between Ukraine and Russia—have injected fresh optimism into global markets, bolstering the dollar further.
However, for Nigeria, the challenge remains the same: bolstering foreign exchange supply. Analysts warn that unless oil revenues, remittances, and foreign investment see meaningful increases, the naira will continue to struggle against a strengthening greenback.
Bottom Line
Nigeria’s oil sector is showing signs of life, but the naira remains vulnerable due to sustained forex demand and global currency dynamics. As the dollar gains strength amid easing trade tensions and improved U.S. economic sentiment, Nigerian policymakers will need to strengthen local reforms and attract capital inflows to support the domestic currency.
