The Nigerian naira fell to a new low, trading between N2,135 and N2,150 against the British pound sterling in the parallel market, as the UK currency surged to a multi-month high against the U.S. dollar.
The decline in the naira comes amid renewed global market volatility, cautious investor sentiment, and anticipation surrounding key monetary decisions in the UK and the U.S.
Currency traders are treading carefully ahead of Thursday’s Bank of England (BoE) policy meeting, where the British central bank is widely expected to hold its benchmark rate steady at 4.25 per cent, following a modest 25-basis-point cut in May.
BoE officials have signaled that any further loosening would be slow, citing the need to assess the impact of U.S. President Donald Trump’s new economic policies—policies that some analysts warn could stoke inflation globally.
Meanwhile, the Nigerian Central Bank injected $580 million into the foreign exchange market in May 2025, a move designed to bolster the naira and restore investor confidence amid growing external pressures.
This direct intervention—channeled through authorized dealers—has been a key tool in CBN’s strategy to manage short-term currency volatility.
Dr. Ayo Salami, an economist at Afrinvest, explained that while the CBN’s injection provided short-term relief, the broader sustainability of such measures remains in question.
“Relying heavily on external reserves to stabilize the naira is not a long-term fix unless we can significantly boost non-oil dollar inflows. That’s the only way to secure a truly resilient exchange rate framework,” he said.
Financial analyst Yetunde Bakare added that the naira remains undervalued but could stabilize in the medium term, thanks to recent reforms and improving investor sentiment.
“The narrowing gap between official and parallel market rates is a sign that policy coordination is starting to work. But we need stronger fiscal discipline and deeper export diversification to lock in these gains,” she noted.
The naira’s recent resilience was underpinned by higher oil prices, which surged amid heightened tensions between Iran and Israel.
However, analysts warn that geopolitical relief is temporary and could quickly reverse if conflict escalation is contained or resolved.
Despite this, higher crude revenues have helped boost foreign portfolio inflows and narrow the exchange rate gap between the NAFEM window and the black market.
The British pound sterling climbed above the 1.36 mark against the U.S. dollar, driven by safe-haven demand and expectations that the BoE will maintain its cautious approach to monetary easing.
The pound’s rise was further fueled by soft U.S. inflation data and investor concerns over Trump’s tariff-led economic policy, which could raise prices and slow global growth.
“We’re seeing some signs of confidence returning to the market,” said forex strategist Kehinde Aluko. “But lasting stability will depend on how well Nigeria manages its fiscal space, boosts non-oil exports, and keeps capital flowing into productive sectors.”