Nigeria’s naira shows resilience despite Middle East tensions, supported by CBN interventions, rising oil production, and growing foreign reserves
Nigeria’s naira is exhibiting renewed resilience, even as ongoing geopolitical tensions in the Middle East continue to place pressure on the currency.
Analysts suggest this stability signals a “new normal,” contrasting with the extreme volatility seen in previous years.
Experts predict the naira will trade within a range of N1,350 to N1,400 per US dollar by the end of the week.
However, any escalation of conflict in the Middle East could push parallel market rates closer to N1,450, as investors seek safe-haven assets.
Conversely, the naira could strengthen toward N1,300 if Nigeria surpasses oil production of 1.6 million barrels per day and the Central Bank of Nigeria (CBN) intervenes strategically.
Periods of global uncertainty often trigger capital outflows from Nigeria and other frontier markets, with investors shifting funds into safer instruments such as the US dollar, Treasury bonds, and gold.
This pattern underscores the naira’s sensitivity to both domestic economic policy and international developments.
The CBN has played a key role in stabilising the naira.
Foreign exchange reserves surged to $50.45 billion in February 2026 a 13-year high giving the central bank substantial “firepower” to meet dollar demand.
With roughly ten months of import cover, Nigeria is better positioned than ever to protect its currency.
Reflecting growing confidence in economic stability, the CBN cut the Minimum Policy Rate (MPR) to 26.5% from 27% in February 2026, the first rate reduction amid a tightening cycle in several years.
This strategic pivot aims to support broader economic growth, projected at 4.3% to 4.7% in 2026.
Nigeria’s dependence on oil, which accounts for roughly 85% of foreign exchange earnings, means crude production and global prices heavily influence the naira.
The upcoming Dangote Refinery, with a capacity of up to 1.4 million barrels per day, is expected to reduce petrol imports, easing pressure on reserves.
The Nigerian National Petroleum Corporation (NNPC) has introduced new crude grades Utapate, Obodo, and Cawthorne boosting daily inflows of hard currency and helping Nigeria approach its OPEC quota of 10.5 million barrels per day.
Geopolitical tensions, however, have a dual effect. Rising crude prices, around $75 per barrel after recent attacks, increase foreign reserves, but heightened uncertainty can raise import costs and trigger capital flight, challenging currency stability.
Nigeria’s 2026 budget is based on a benchmark crude price of $64.85 per barrel, meaning sustained higher prices could significantly strengthen reserves, projected between $45 billion and $51 billion.
Domestic challenges, including oil theft and aging infrastructure, continue to limit consistent daily production, preventing Nigeria from fully capitalising on potential gains.
Global currency trends also affect the naira.
The US dollar index (DXY) recently retreated from five-week highs to 97.90 during Monday’s Asian trading hours.
Nevertheless, military escalations in the Middle East, including US and Israeli strikes in Iran and subsequent retaliations, are expected to maintain demand for the dollar as a safe-haven currency, indirectly influencing Nigeria’s currency and foreign reserves.
