The Nigerian naira maintained its footing within the N1,600–N1,605 per dollar range throughout the past week, even as the U.S. dollar regained strength following a brief slump to a three-year low on the global index.
Although the dollar index had earlier slumped to levels not seen since March 2022, the naira’s performance has remained relatively unchanged. This stability is particularly notable given persistent headwinds facing Nigeria’s economy, including falling global oil prices, escalating trade uncertainties, and a widening trade deficit that continues to exert mild pressure on the domestic currency.
CBN Reaffirms Commitment to Policy Reforms and Transparency
Speaking at an investment dialogue in New York, the Governor of the Central Bank of Nigeria (CBN), Mr. Yemi Cardoso, reiterated the bank’s dedication to restoring market confidence and advancing monetary reform. He assured international investors that the central bank would maintain transparency in its policy direction moving forward.
“We must change public perception by rebuilding confidence through adjustments to our monetary policy framework,” Cardoso stated. “That confidence was missing in the past, but now we are laser-focused on taking concrete action. There’s no going back on our reform path.”
Cardoso also cited Nigeria’s recent ratings outlook improvement from Fitch Ratings. The upgrade, which shifted the country’s long-term foreign-currency issuer default rating (IDR) from negative to stable, is expected to boost investor sentiment and enhance Nigeria’s access to favorable international credit and investment terms.
Global Dollar Strength Returns Amid Trade Hopes
Meanwhile, in the global currency landscape, the dollar regained buying momentum during mid-week trading. This rebound followed encouraging comments from U.S. Treasury Secretary Scott Bessent, who suggested that the U.S. and China could move toward easing trade tensions.
Bessent, speaking privately to investors, signaled that neither Washington nor Beijing wanted to extend the economic standoff, which has weighed heavily on global trade and investor confidence. He also emphasized that the Trump administration was not pursuing a full economic decoupling from China.
Adding to the drama surrounding U.S. financial policy, President Donald Trump clarified that he had no intention of removing Federal Reserve Chair Jerome Powell, despite previously expressing strong dissatisfaction with the Fed’s monetary stance.
“There’s no plan to fire Powell. Never had one,” Trump said during a conversation at the Oval Office. This marked a notable softening in tone from earlier threats, where Trump publicly criticized Powell and hinted at replacing him to force interest rate cuts.
Just last week, Trump stated, “If I want him out of there, he’ll be gone in a heartbeat,” reinforcing the ongoing tension between the White House and the central bank.
Market Jitters as Fed Independence Questioned
Trump’s continued verbal attacks on the Federal Reserve raised red flags among investors, who view such pressure as a potential threat to the Fed’s independence. These concerns sparked fears about long-term policy stability and undermined confidence in the dollar’s role as the world’s primary reserve currency.
Following Trump’s statements and a modest rebound in risk appetite, the dollar index rose 1% to 99 points after previously dipping to 97.8—a level last seen more than three years ago. Despite the bounce, the dollar hovered near multi-year lows against the euro and Swiss franc, as traders remained cautious amid lingering geopolitical and economic uncertainty.
Analysts have warned that any perception of political interference in U.S. monetary policy could lead to sustained investor skepticism. Some market participants have already begun rebalancing their portfolios, reducing exposure to U.S. assets over fears of declining asset values and broader economic instability.
U.S. Treasury Markets Underperform, but Remain a Safe Haven
Compounding the pressure, U.S. Treasury bonds recently underperformed compared to other advanced economies, raising doubts about their short-term attractiveness. Still, investors continue to view Treasuries as the world’s top safe-haven investment due to the depth of the market, dollar liquidity, and the perception of U.S. economic resilience.
Despite temporary deleveraging and capital outflows, analysts interpret current conditions as a rebalancing phase rather than a wholesale exit from U.S. debt. The decline in appetite for U.S. securities has nonetheless added to the volatility observed in global financial markets in recent weeks.
Outlook: Dollar Strength to Rebound Amid Global Slowdown
Looking ahead, market experts anticipate a renewed rally for the U.S. dollar in the event of a broader economic downturn. As global growth continues to decelerate, investors may increasingly favor the dollar for its perceived safety, vast liquidity, and foundational role in international finance.
For Nigeria, however, the future of the naira remains tied to both domestic reform momentum and global market conditions. As the CBN continues to reinforce its commitment to transparency and reform, restoring investor trust will be vital to supporting currency stability and fostering sustainable economic recovery.
With Cardoso’s monetary overhaul underway and international sentiment beginning to shift in Nigeria’s favor, the nation’s ability to navigate external challenges while maintaining currency stability will be a key factor in shaping investor decisions and economic performance over the coming months.
