The Nigerian Naira recorded its strongest one-day performance of the year on Thursday, buoyed by a sharp drop in the U.S. Dollar Index following disappointing U.S. labor market data.
The local currency appreciated from ₦1,521.46/$ on Wednesday to ₦1,514.87/$ on Thursday at the official foreign exchange window, while also gaining across the parallel market, pushing rates firmly below the ₦1,550/$ band.
Analysts attribute the rebound to a combination of domestic resilience and external tailwinds, chiefly the weakening of the greenback. The U.S. Dollar Index tumbled to a five-week low after the latest Nonfarm Payrolls report showed the U.S. economy added just 22,000 jobs in August, far short of market expectations of 75,000.
The weak employment figures have heightened expectations that the U.S. Federal Reserve will deliver a 25 to 50 basis-point rate cut at its upcoming policy meeting. Investors’ repositioning has weighed on the dollar globally, providing breathing room for emerging-market currencies, including the Naira.
Meanwhile, Standard Bank has revised its year-end forecast for the USD/NGN exchange rate. The bank now projects the Naira to close 2025 at around ₦1,585.50/$, a more favorable outlook compared to its earlier forecast of ₦1,697.50/$.
Outlook
Market watchers note that while the Naira’s rally is encouraging, sustained stability will depend on Nigeria’s ability to boost dollar inflows through improved oil earnings, foreign investments, and non-oil exports. Nonetheless, the recent appreciation marks a rare “double win” for Africa’s largest economy: a stronger local currency and easing external pressure from a softer U.S. dollar.