The Nigerian naira continued its bullish run against the United States dollar, with the latest market indicators suggesting the local currency could strengthen further below the N1,350/$ threshold if current momentum is sustained.
The naira has recorded a notable recovery against the dollar in the first half of May, with the exchange rate falling significantly below the key psychological level of N1,400/$. Analysts said the currency is now testing stronger support levels around the N1,350/$ mark, with prospects of further appreciation toward the N1,320/$ region if buying pressure on the naira persists.
Market observers noted that the Central Bank of Nigeria’s (CBN) priority at this stage would be to sustain medium-term exchange rate stability amid improving foreign exchange liquidity conditions.
Recent developments indicate increased forex inflows from foreign investors, exporters, and oil companies, boosting dollar supply in the market. Traders said attractive yields in Nigeria’s debt market have continued to draw foreign portfolio investments, thereby improving naira liquidity and supporting the local currency.
The gap between the official foreign exchange market and the parallel market has also continued to narrow, reflecting improving market convergence. The naira traded around N1,356/$ at the official market, while the parallel market rate hovered near N1,404/$.
Analysts described the narrowing spread between both markets as a positive signal that exchange rates are gradually aligning, a development expected to improve investor confidence and reduce speculative pressure on the currency.
Meanwhile, the US dollar strengthened slightly in the global foreign exchange market amid heightened geopolitical tensions in the Middle East. The US Dollar Index (DXY), which measures the greenback against six major global currencies, traded around 98.1 during the London session, recovering after recent losses.
The renewed demand for the dollar followed rising risk aversion after the United States and Iran reportedly rejected each other’s latest peace proposals aimed at easing tensions in the region. US President Donald Trump reportedly described Iran’s latest proposal as “totally unacceptable.”
Iranian state television also quoted an official as saying Tehran’s response focused on resolving the conflict across multiple fronts, particularly in Lebanon, while addressing security concerns around major shipping routes.
Analysts warned that prolonged tensions in the Middle East and the fragile ceasefire conditions could sustain demand for the US dollar as a safe-haven asset, potentially creating fresh pressure on emerging market currencies, including the naira.
Economic data from the United States further supported the dollar. The US Bureau of Labor Statistics reported that Nonfarm Payrolls increased by 115,000 in April, higher than market expectations of 62,000, although lower than the revised March figure of 185,000. The unemployment rate remained unchanged at 4.3 per cent, in line with forecasts.
In the commodities market, gold prices opened the week lower, remaining below the $4,700 mark in London trading as investors increased their positions in the US dollar. Analysts attributed the pressure on gold to ongoing geopolitical uncertainties and expectations that the US Federal Reserve may maintain a hawkish monetary policy stance.
