Nigeria’s naira has entered the latest wave of global market turbulence from a stronger position, with the Central Bank of Nigeria (CBN) having rebuilt its foreign-exchange buffers and cleared a long-standing $7 billion FX backlog.
A recent BusinessDay analysis published on August 26 highlights how the US-Iran conflict and resulting disruption risks around the Strait of Hormuz have tested global energy and financial markets, with Nigeria exposed through oil prices, foreign portfolio flows and exchange-rate pressures.
At the height of the initial shock, the CBN injected about $200 million into the FX market within 48 hours, followed by another $1.1 billion added to foreign reserves in the weeks that followed. The interventions helped limit pressure on the naira as global investors reassessed emerging-market risks.
Nigeria’s position has also been strengthened by the clearance of the verified $7 billion FX backlog, tighter monetary policy and renewed portfolio inflows. These developments helped push the country’s foreign reserves to a 17-year high, giving policymakers greater room to respond to external shocks.
For investors and businesses, however, the improved buffer does not eliminate risk. Nigeria remains highly sensitive to global oil prices, geopolitical tensions, capital flows and future CBN policy decisions.
The key question now is whether the stronger FX position can withstand another prolonged external shock without renewed pressure on the naira.
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