The Nigerian naira continued its upward trajectory on the official foreign exchange market, reaching a four-month high and closing at N1,518 per US dollar on Monday. This marks the currency’s strongest performance against the greenback since March 2025 and signals growing stability in the nation’s foreign exchange market.

According to data released by the Central Bank of Nigeria (CBN), the naira traded below the psychological N1,520/$ threshold for the first time in months, fueling optimism that it may soon break the N1,500/$ barrier.

CBN Actions Draw Foreign Investor Interest

The sustained rally in the naira’s value has been attributed largely to the direct interventions by the CBN, which included a $50 million sale to the market last week and a successful Open Market Operations (OMO) auction that captured the attention of foreign investors. These strategic moves have helped ease dollar scarcity, increase liquidity, and instill greater confidence among market participants.

The apex bank’s interventions, coupled with improved inflows from foreign portfolio investors, are significantly containing exchange rate volatility and alleviating pressure on the naira.

Banks Lift Restrictions on Naira Debit Cards

One of the most notable outcomes of improved dollar liquidity is the lifting of the three-year restriction on international transactions via naira-funded debit cards. Major Nigerian financial institutions, including FirstBank, Guaranty Trust Bank (GTBank), United Bank for Africa (UBA), and Wema Bank, have resumed enabling their customers to use naira debit cards for overseas purchases.

Previously, most Nigerian banks had suspended international use of naira cards due to severe dollar shortages, forcing customers to rely solely on dollar-funded cards linked to domiciliary accounts. The resumption of international naira card usage is a key signal of recovery in Nigeria’s FX reserves and an improvement in the accessibility of foreign currencies for both individuals and businesses.

Positive Momentum in Oil Production Bolsters Outlook

Adding to the naira’s bullish momentum, Nigeria’s crude oil production hit a six-month high, averaging 1.547 million barrels per day (bpd) in June 2025. This figure, released by the Organization of Petroleum Exporting Countries (OPEC), marks a 3.58% increase from the 1.453 million bpd reported in May.

Oil remains Nigeria’s primary source of foreign exchange, and any increase in output translates to higher FX earnings. The rise in production has helped solidify investor confidence in the country’s fiscal position and foreign exchange market. It also supports the CBN’s continued ability to defend the naira through market interventions.

Exchange Rate Fundamentals Show Resilience

Several positive fundamentals have contributed to the naira’s appreciation in recent weeks:

• Increased foreign portfolio inflows through OMO and treasury instruments.

• More stable crude oil prices and higher production levels.

• Tightened monetary policy under CBN Governor Yemi Cardoso, which has improved investor sentiment.

• Stronger interbank FX market participation and transparency in FX price discovery.

All of these factors have combined to paint a rosier outlook for Nigeria’s exchange rate in the near to medium term.

Global Dollar Surge Adds Mixed Impact

While Nigeria’s domestic currency market shows signs of improvement, developments in the global FX market continue to exert influence. On Wednesday, the U.S. dollar surged following the release of fresh inflation data pointing to a rise in prices driven by tariffs enacted under President Donald Trump’s administration.

According to the latest inflation report, prices for imported goods such as coffee, electronics, and furniture rose sharply in June, pushing up the overall inflation rate. This has led to a shift in investor expectations, with many reducing their bets on near-term interest rate cuts by the U.S. Federal Reserve.

The reaction triggered a rally in U.S. Treasury yields and sent the Japanese yen to a four-month low of 149 against the dollar. The euro and British pound also declined, hovering near three-week lows amid fears that the strong dollar might continue to gain traction.

Uncertainty Around Fed Leadership Raises Concerns

Further complicating the outlook for U.S. monetary policy is the mounting pressure on Federal Reserve Chairman Jerome Powell, who has faced repeated calls to resign from President Trump. The President has also criticized Powell over the $2.5 billion cost overrun on the renovation of the Fed’s Washington headquarters, calling it a potential “firing offense.”

These tensions have fueled speculation that Powell may leave office earlier than expected, potentially clearing the way for a Trump-appointed successor more inclined toward looser monetary policy. Currency traders have voiced concerns that such a move could introduce additional volatility into global markets, especially if it leads to faster or deeper rate cuts.

Implications for Nigeria

While a stronger U.S. dollar typically puts downward pressure on emerging market currencies, Nigeria’s recent policy reforms and stronger fundamentals have so far helped shield the naira from such global shocks. With the CBN actively supporting the market, and oil revenues on the rise, the country appears better positioned to manage any turbulence that may emerge from global currency shifts.

Additionally, the resumption of international naira card usage and ongoing reforms in the FX market are likely to continue attracting foreign capital inflows, further strengthening the naira’s position in the official market.

Final Thoughts

Nigeria’s economic environment appears to be stabilizing, with the naira gaining strength, foreign exchange liquidity improving, and oil revenues rising. The CBN’s proactive measures, combined with a more transparent and accessible FX market, have boosted investor confidence and improved the country’s financial outlook.

While global risks such as U.S. inflation and leadership uncertainties remain on the horizon, Nigeria’s ongoing efforts to strengthen its monetary and fiscal stability are paying off. If the current momentum holds, the naira may soon break through the N1,500/$ level, a key psychological milestone that would signal a new phase of FX resilience for the country.