Market News

By : Abigail Ikhaghu

The naira has emerged as the second-best-performing African currency against the dollar year-to-date, trailing only the Zambian kwacha, even as Nigeria’s foreign exchange reserves declined for 16 consecutive days to $48.94 billion as at the weekend, their lowest level since mid-February.

According to Head of Market Research at FXTM, Lukman Otunuga, the currency’s stability in the face of conflict-driven market volatility has come at a high cost, with the Central Bank of Nigeria (CBN) intervening to support the local unit.

He noted that the apex bank followed through on its commitment to defend the currency in March as escalating geopolitical risks weighed on emerging market assets.

Otunuga said: “Its stability through conflict-induced volatility is commendable, but such has come at a heavy cost,” pointing to the sustained drop in reserves through early April.

According to him, attention is also on Nigeria’s inflation data for March, which is expected to show a moderation in price pressures. The consumer price index (CPI) is projected to ease to 13.4 per cent year-on-year from 15.1 per cent recorded in February.

He explained that “persistent signs of easing inflationary pressures may encourage the CBN to cut rates in an environment where other central banks are considering hiking to tame conflict-induced inflation.”

On global developments, Otunuga said unresolved talks between the United States and Iran have continued to shape market sentiment after both sides failed to reach an agreement on key issues, including Iran’s nuclear programme and control of the Strait of Hormuz, despite 21 hours of negotiations.

He added that the situation worsened after U.S. President Donald Trump threatened to block the Strait of Hormuz, noting that the renewed uncertainty unsettled global markets.

“This fresh uncertainty was reflected across markets this morning, with risk aversion affecting equities, while oil benchmarks surged amid rising geopolitical risk premiums,” he said.

Otunuga said Iran’s rejection of U.S. shipping restrictions and threats toward Gulf ports have kept investor sentiment fragile, with markets remaining highly sensitive to further developments.

He noted that the Strait of Hormuz has effectively been closed since late February, raising concerns over potential inflation and growth shocks to the global economy.

In the commodities market, Otunuga said oil prices reacted sharply to the escalating tensions, with Brent crude rising by as much as nine per cent to about $104 per barrel due to fears of supply disruptions.

Otunuga said: “Deepening conflict may keep oil prices elevated, with triple digits potentially becoming a new normal amid extreme supply tightness.”

On gold, Otunuga said prices showed mixed performance, initially declining on rising inflation concerns linked to higher oil prices, although they later rebounded above $4,700.

He added that expectations for lower interest rates in 2026 have weakened, while a stronger dollar continues to pressure the metal.