Naira settles at N1,361/$ as dollar stays supported on strong U.S. jobs data

The Nigerian naira settled at N1,361 per U.S. dollar this week, showing limited volatility as the Central Bank of Nigeria (CBN) maintains tight control over the foreign exchange market. The CBN’s interventions—including direct dollar sales to Bureau De Change (BDC) operators and dealers—have been the primary tool to curb exchange rate fluctuations. Sustainability of the naira’s stability hinges on Nigeria’s foreign reserves, which currently stand at around $50 billion, providing nearly nine months of import cover. To reduce excess naira liquidity, the CBN has set the Cash Reserve Ratio (CRR) at 45%, while the Monetary Policy Committee (MPC) continues raising interest rates to combat persistent inflation. The naira’s equilibrium remains heavily managed, with its long-term strength dependent on oil revenues and the CBN’s ability to balance inflation control without economic strain. Demand for naira-denominated assets, such as short-term sovereign debt and money market funds, has provided medium-term support, though corporate demand continues to pressure the parallel market. Progress has been made in settling verified FX backlogs for airlines and foreign investors, easing some tensions. Meanwhile, the U.S. dollar remains supported by strong labor market data, with Nonfarm Payrolls surging to 172,000—far exceeding expectations of 85,000. The U.S. Dollar Index (DXY) tested the 100 mark, reinforcing expectations that the Federal Reserve will delay rate cuts amid rising inflation forecasts. April’s headline inflation hit 3.8%, with projections suggesting May could exceed 4.0%, driven by firm energy costs. Investors are now closely watching U.S. price data, including the Consumer Price Index (CPI) and Producer Price Index (PPI), which could further strengthen the dollar if inflation remains elevated. The Fed’s policy stance remains a dominant factor in global currency markets, overshadowing recent volatility in tech stocks.