The naira appreciated to N1,650 per dollar in the parallel market on Monday, as the U.S. dollar recorded its most significant weekly loss in over a year. This marks a 0.6% gain, or N10, compared to the N1,660 per dollar exchange rate recorded last Friday.
In the official foreign exchange (FX) market, the naira closed last week at N1,531 per dollar, reflecting a 1.1% week-on-week appreciation. This was N17 stronger than the previous Friday’s rate of N1,548, according to data from the Central Bank of Nigeria (CBN).
U.S. Dollar Declines on Trade Policy Uncertainty
The U.S. dollar experienced a 0.65% drop against a basket of currencies on Friday, narrowing from an earlier decline of 0.8%. Despite this partial recovery, the dollar faced its sharpest weekly decline since November 2023, falling 1.8% since Monday.
This came after former U.S. President Donald Trump hinted at a potential shift in trade policy toward China. During an interview with Fox News, Trump described a positive discussion with Chinese President Xi Jinping, expressing hope for a trade agreement. He remarked, “We have one very big power over China, and that’s tariffs, and they don’t want them. I’d rather not have to use it, but it’s a tremendous power over China.”
Expert Analysis on Impact
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), explained how U.S. policies under Trump could indirectly influence the naira. A stronger dollar could result from increased U.S. investments and rising employment levels. Yusuf noted early signs of this in the U.S. stock market, where growing investor confidence may bolster the dollar’s strength and potentially impact the naira’s value in global markets.
The interplay between international trade policies and Nigeria’s currency underscores the importance of maintaining stability in both local and global markets.