Fresh geopolitical tensions between the United States and Iran have coincided with a modest strengthening of the Naira, which is showing signs of consolidation against the US dollar after its recent bullish run.
The Nigerian currency appreciated slightly at the official market, gaining about 0.3 per cent to settle around N1,348/$, after touching an intraday low of N1,346.6/$. This follows a peak of N1,389/$ earlier in the month, suggesting the currency pair is now stabilising, albeit with a continued appreciation bias.
Since the beginning of 2026, the Naira has recorded significant gains, strengthening from about N1,440/$. Analysts attribute this recovery to improved foreign exchange liquidity and sustained interventions by the Central Bank of Nigeria (CBN).
However, the parallel market presents a slightly different outlook. The US dollar continues to trade at a premium in Lagos and Abuja, reflecting persistent demand from retail users and small-scale businesses. Despite this, the gap between official and parallel market rates has narrowed to below five per cent, aided by ongoing monetary reforms.
Frequent foreign exchange auctions to Bureau De Change (BDC) operators have also helped stabilise the parallel market, while relatively stable crude oil prices have boosted external reserves, enhancing the authorities’ capacity to support the currency.
Investor sentiment remains supported by attractive domestic interest rates, which continue to draw portfolio inflows.
From a technical standpoint, the outlook for the Naira remains cautiously optimistic. A break below the N1,340/$ support level could pave the way for further appreciation toward the psychological N1,300/$ mark. This scenario is underpinned by rising oil output and external reserves, currently nearing $48 billion.
Conversely, a close above N1,360/$ may signal renewed depreciation pressure, with a potential retest of the N1,380/$ range. Such a scenario could be triggered by seasonal corporate demand for foreign exchange or adverse political developments affecting oil revenues.
Meanwhile, the US Dollar Index (DXY), which tracks the greenback against a basket of major currencies, is trading around 98.3, reflecting modest gains amid heightened geopolitical uncertainty.
The dollar has found support from renewed tensions between Washington and Tehran. Iran’s Foreign Ministry spokesman, Esmail Baghaei, recently described reported US actions affecting its coastline and ports as provocative and inconsistent with ongoing ceasefire efforts.
Iran has also announced its withdrawal from the second round of negotiations with the United States, further dampening prospects for a near-term resolution ahead of the April 22 ceasefire deadline. Reports indicate that US President Donald Trump has directed negotiators toward alternative diplomatic engagements.
As uncertainty persists, investors have gravitated toward safe-haven assets such as the US dollar, particularly given the strategic importance of the Strait of Hormuz and the diminishing likelihood of immediate diplomatic breakthroughs.
Despite this, technical indicators suggest a near-term bearish bias for the dollar. The DXY remains within a descending channel and continues to trade below key short-term moving averages, indicating that previous support levels have turned into resistance.
