The naira depreciated at the official foreign exchange window as mounting FX payment obligations strained market liquidity, even as Nigeria’s external reserves continued their gradual climb.
Data from the Central Bank of Nigeria showed that the spot exchange rate weakened by 0.21 per cent, with the naira closing at ₦1,421.63 per US dollar at the official window. By the end of trading on Friday, losses had deepened, reflecting a 0.72 per cent decline on the session.
In the parallel market, the local currency also came under pressure, slipping to around ₦1,475 per dollar, as persistent demand for foreign currency and structural imbalances continued to weigh on sentiment.
Market analysts attributed the renewed weakness to heightened global uncertainties, including escalating geopolitical tensions and trade-related risks emanating from the United States, which have fueled risk aversion and capital flow volatility across emerging markets.
Some forecasts suggest that the naira could face additional pressure in the near term, particularly amid evolving financial market dynamics that may trigger asset sell-offs. Analysts cited potential adjustments around capital gains taxation as one of the factors capable of influencing portfolio flows.
Cowry Asset Limited noted that while rising FX demand and structural challenges are likely to keep the naira under strain, the steady improvement in Nigeria’s external reserves could provide a degree of support.
Nigeria’s foreign reserves edged up by 0.20 per cent to $45.99 billion, buoyed by consistent crude oil earnings, improved non-oil inflows, and a sustained trade surplus.
Meanwhile, developments in global commodity markets added another layer of complexity to currency and asset price movements. International oil prices settled at their highest levels in more than a week after U.S. President Donald Trump intensified pressure on Iran through additional sanctions targeting vessels transporting Iranian crude, alongside announcements of increased U.S. naval presence in the Middle East.
These remarks heightened geopolitical risk premiums, pushing Brent crude to $64.50 per barrel, while U.S. West Texas Intermediate climbed to $59.78 per barrel, reversing earlier losses linked to easing trade tensions between the United States and Europe.
However, Nigeria’s Bonny Light crude moved in the opposite direction, declining 1.21 per cent to $67.61 per barrel, amid concerns that potential supply disruptions from Iran could alter global oil flows. Analysts expect oil prices to remain volatile in the near term, driven by Middle East tensions and OPEC supply decisions.
Gold prices surged as investors sought safe-haven assets amid geopolitical uncertainty, a softer U.S. dollar, and heightened policy risks. Strong central bank purchases also supported the rally, pushing the precious metal closer to the psychologically significant $5,000 level.
According to a report by CME Group, geopolitical developments have dominated investor attention in the new year, with significant implications for energy markets. One of the most consequential shifts has been the transformation underway in Venezuela’s oil sector, which could have far-reaching effects on global crude supply dynamics and the pricing relationship between WTI and Brent.
The report noted that as the United States increasingly positions itself as the primary overseer of oil production and exports from Latin American OPEC members, refiners along the U.S. Gulf Coast are expected to receive growing volumes of heavy-grade Venezuelan crude. These refiners were originally designed to process such grades, potentially reshaping crude trade flows and refining margins.
