The naira rebounded against the US dollar, despite heightened uncertainty following threats from US President Donald Trump.
The local currency briefly slumped on Monday, November 3, 2025, due to threats of military action in Nigeria by the US government.
Data from the Nigerian Foreign Exchange Market showed the local currency closing at N1,433 per dollar, marking an appreciation of about N3 from the previous day’s rate.
The rebound was largely attributed to improved foreign exchange liquidity and a decline in demand pressure.
Market dealers noted that increased inflows, particularly from foreign portfolio investors, helped stabilize the market after days of volatility triggered by global political developments.
Foreign exchange liquidity surged as more investors sought to take advantage of attractive yields in the domestic market.
Analysts said the renewed investor interest was evident at this week’s auction, where foreign portfolio investors positioned themselves ahead of expected gains in Nigeria’s fixed-income instruments. The official FX window recorded higher dollar availability, easing the tension that had driven rates upward earlier in the week.
According to traders, the spot FX rate touched an intraday high of N1,442.45 per dollar before settling lower at N1,433, with the lowest rate of the day printing at N1,430.
This development reflects an encouraging turnaround for the naira, which had been under pressure due to external uncertainties and speculative trading. The increased supply of dollars into the system helped to moderate the exchange rate fluctuations, signaling a more balanced forex market environment.
Another key driver of the naira’s resilience was the steady improvement in Nigeria’s gross external reserves, which rose to $43.259 billion as of the end of October, up from $43.197 billion recorded earlier in the month.
The Central Bank of Nigeria (CBN) attributed this increase to stronger hydrocarbon revenue inflows and consistent foreign investments in Nigeria’s debt instruments.
According to Market Forces Africa, rising reserves not only boost market confidence but also provide the monetary authorities with greater capacity to intervene when necessary to stabilize the naira.
Economists believe that with the current momentum, the local currency could maintain a relatively stable trajectory in the short term, provided that inflows continue and speculative pressure remains low.
Market experts say the combination of rising reserves, increased dollar inflows, and reduced demand pressure may sustain the naira’s recovery in the near term.
They, however, caution that external political developments, such as the ongoing diplomatic tension between the US and Nigeria, could influence investor sentiment.
“Liquidity is improving, and the fundamentals are aligning, but any escalation in geopolitical risks could still create temporary volatility,” one analyst, Janet Ogochukwu, an economist and senior banker, said.
As the Central Bank continues to monitor the market closely, stakeholders are optimistic that a mix of improved fiscal discipline, stable oil revenue, and investor confidence will keep the naira on a stronger path in the coming weeks.
