Nigeria’s currency, the naira, has demonstrated notable resilience amid heightened global uncertainty, but experts warn that this stability has come at a considerable cost.
Lukman Otunuga, Head of Market Research at FXTM Academy, described the naira’s performance as commendable, noting that it currently stands as the second best-performing currency in Africa against the US dollar so far this year, behind only the Zambian kwacha.
However, this relative strength has been supported by sustained interventions from the Central Bank of Nigeria (CBN), which appear to be weighing on the country’s external reserves. Data shows that Nigeria’s foreign exchange reserves declined for 16 consecutive days up to April 8, falling to $48.94 billion — the lowest level recorded since mid-February.
Otunuga explained that the CBN has remained committed to defending the local currency, particularly during March, when rising geopolitical tensions triggered volatility across emerging markets.
Attention is now shifting to domestic economic indicators, with Nigeria’s March inflation report expected to provide fresh direction. Otunuga projected that the Consumer Price Index (CPI) could ease to 13.4 percent year-on-year, down from 15.1 percent in February.
A sustained slowdown in inflation, he noted, may create room for the CBN to consider cutting interest rates — a move that would contrast with the tightening stance adopted by many central banks globally in response to inflationary pressures linked to geopolitical conflicts.
On the global front, unresolved tensions in the Middle East continue to rattle financial markets. Recent negotiations between the United States and Iran ended without agreement after 21 hours of talks, particularly over Iran’s nuclear programme and control of the Strait of Hormuz — a critical artery for global oil supply.
Otunuga warned that the uncertainty has intensified risk aversion among investors, dragging equities while pushing oil prices higher. Brent crude surged by as much as nine percent to around $104 per barrel amid fears of supply disruptions.
He added that Iran’s rejection of US shipping restrictions and threats targeting Gulf ports have further heightened market anxiety, with developments around the Strait of Hormuz posing ongoing risks to global inflation and economic growth.
In commodities, oil’s sharp rally has also influenced other asset classes. Gold prices initially declined under pressure from rising inflation concerns tied to higher oil prices. Although the precious metal later rebounded above $4,700, bearish sentiment persists due to expectations of prolonged elevated interest rates and a stronger US dollar.
Otunuga highlighted key technical levels for gold at $4,825, $4,700, and $4,600, noting that market direction will largely depend on evolving macroeconomic and geopolitical developments.
