Naira slumps to N1,600/$ after closing March at N1,537/$

• The naira slumped to N1,600/$ after closing March at N1,537/$
• The currency recorded intra-day highs and lows of N1,625/$ and N1,519/$, respectively at the close of trading on Friday
• The weak performance comes amid increase in Nigeria’s net foreign external reserves and US President Donald Trump’s tariffs imposition.

The naira closed the trading week, which ended April 4 weaker, slumping to N1,600/$ after closing March at N1,537/$.

The naira’s weak performance comes amid trade tariffs imposed on countries by the President Donald Trump’s administration, with a 14 per cent tariff imposed on Nigerian exports under the new law.

According to data from the Central Bank of Nigeria (CBN), the naira depreciated by 1.9 per cent to N1,600/$ on Friday, April 4 compared to the N1,569/$1 recorded on Thursday, April 3.

The naira also depreciated by 3.9 per cent in the first four days of April compared to the N1,537/$ it closed March at.

The N1,600/$ recorded on Friday was the naira's weakest level since December 4, 2024, when it closed at N1,608/$1.

Analysis of trading activity

The CBN data further showed that the naira recorded intra-day highs and lows of N1,625/$ and N1,519/$, respectively, at the close of trading on Friday.

The intra-day high of N1,625 was also one of the highest levels recorded this year, suggesting that traders priced the naira weaker, while the intra-day low of N1,519/$1 indicates that some traders still priced the naira stronger.

The Nigerian Foreign Exchange Market (NFEM) rate, which is the average exchange rate, closed at N1,567/$, its weakest level since December 4, 2024.

Naira slumps amid net foreign external reserves increase

The CBN, on April 1, disclosed that Nigeria’s Net Foreign External Reserves (NFER) increased to $23.11 billion at the end of 2024, its highest level in over three years.

According to the CBN, the net foreign external reserves recorded at the end of 2024 marked a significant increase from the $3.99 billion recorded at the end of 2023, $8.19 billion in 2022, and $14.59 billion in 2021.

Though some analysts say the increase in the net foreign external reserves is a positive development, others say the reserves are still not robust enough, given Nigeria’s continued dependence on portfolio inflows to shore up reserves.

The naira in a Trump tariffs era

Recall that on April 2, President Trump announced sweeping tariffs, including a baseline 10 per cent tariff on US imports and reciprocal tariffs against countries that impose higher duties on US goods.

The new tariffs, which take effect immediately, apply to over 50 countries, including China, the European Union, India, Japan, and developing economies in Africa, Asia, and Latin America.

The tariff imposition extends to Nigeria, Ghana, Ethiopia, Mauritius, Algeria, and other African countries.

While Nigeria currently imposes a 27 per cent tariff on US goods, the US announced that it will apply a 14 per cent reciprocal tariff on Nigerian exports under the new law.

Trump said the move aims to supercharge America’s economy and force open foreign markets that are accused of shutting out US goods.

Though the tariffs are not expected to affect Nigeria’s trade position with the US to a large extent, the likely impact will be felt on the crude oil front, as Nigeria relies heavily on crude oil to shore up its foreign currency earnings and thus prefers higher oil prices.

Naira gains N30 against dollar at parallel market, closes week flat at official window

Meanwhile, TheRadar earlier reported that the naira gained N30 against the dollar in the parallel market at the end of the week’s trading session on Friday, March 28, but closed flat at the official window,

At the parallel market, the naira recorded a 1.9 per cent gain against the dollar after trading on Friday, as it was quoted at N1,550/$ compared to the N1,580/$ it closed at on Friday last week.