The naira opened Friday’s trading session at N1,580/$ in the parallel market, appreciating slightly from N1,590/$ on Thursday, despite a stronger U.S. dollar in the global financial market.

However, economic fundamentals suggest the Nigerian currency remains vulnerable. The naira’s value is heavily tied to crude oil earnings, and concerns over weak global demand, U.S. trade tensions, and OPEC+ production quota increases continue to exert pressure on Nigeria’s foreign exchange reserves.

The naira appreciated slightly in the parallel market on Friday, opening the trading session at N1,580/$ compared to Thursday’s rate of N1,590/$.

The modest appreciation came despite a broader strengthening of the U.S. dollar in the global financial market.

While the naira’s stability may appear surprising given the U.S. dollar’s strength, it can be explained by several factors.

The bulk of the naira’s value is derived from the price of crude oil, a key export commodity for Nigeria.

Recently, oil prices have been showing signs of weakness due to weak global demand, U.S. trade tensions, and OPEC+ members’ decision to increase their production quota.

However, in the past few days, oil prices have shown signs of recovery, which may be supporting the naira’s stability.

Moreover, the stability of the naira is crucial for the Nigerian economy, as it can influence other economic indicators such as inflation.

Recent data from the National Bureau of Statistics (NBS) has shown that the naira’s relative stability in the first quarter of 2025 contributed to a reduction in Nigeria’s inflation rate.

The NBS reported that Nigeria’s inflation rate decreased to 23.18% in February, down from 24.48% in January, marking the first slowdown in inflation this year.

The decline in the inflation rate was attributed to lower energy prices, a stable naira, and the rebasing of Nigeria’s inflation index.