NAIRA hit a 2-year high of 1,396.9909 to the dollar on Thursday, gaining 3.39, but the dollar weakened to its lowest level in at least 4 years on United States’ President Donald Trump’s policies and the growing possibility of an American shutdown.
On Wednesday, the naira strengthened to its best level in 22 months, closing at 1,400 per dollar at the official foreign exchange (FX) market, a milestone that signalled growing confidence in the country’s economic reforms and improving financial stability.
Data gleaned from the Central Bank of Nigeria (CBN) showed that the naira appreciated by N18.47 from the N1,418.95/$ recorded on January 26. Analysts said the rebound reflected the impact of President Bola Tinubu’s wide-ranging economic reforms, particularly in the FX and monetary policy space.
The naira strengthened further to a 2-year high on Thursday, but the U.S. Dollar Index dropped to 96, down almost 11 percent over the past year, as President Donald Trump told reporters that he was “not concerned” about the currency’s decline. A weaker dollar means pricier imports, higher fuel costs, and potentially steeper interest rates on mortgage, car loan, and credit cards, Investopedia says.
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The biggest reason for the dollar fall is President Trump’s promotion of tariff policy and pressure on the Fed to lower the key rate, FxPro Chief mMarket Analyst, Mr Alex Kuptsikevich, told CBS News. “Over the past couple of weeks, these factors have resurfaced due to a new round of tariff threats and Trump’s comments that he feels comfortable with the dollar at its current level,” he said.
The risks of a government shutdown are also rising, as Democratic lawmakers demand changes in how immigration agencies are carrying out Mr. Trump’s agenda ahead of a Saturday shutdown deadline, CBS News said. If that occurs, it would follow last year’s historically long shutdown, which spanned 43 days, disrupting air travel and leaving thousands of workers without paychecks.
The uncertainty is forcing some investors to tread more cautiously when it comes to the dollar, said CEO of financial advisory firm de Vere Group, Mr Nigel Green. The dollar’s strength depends on “institutional stability, fiscal credibility and policy predictability,” he said in an email. “Shutdown risks weaken all three pillars.”
Trump’s ill-advised immigration policy
The fatal shooting in Minneapolis by federal agents has drawn Americans’ ire , with citizens protesting Mr Trump’s ill-advised immigration enforcement efforts.
Senate Minority Leader Chuck Schumer said Democrats would oppose a government funding bill that included money for the Department of Homeland Security, which oversees Customs and Border Protection and Immigration and Customs Enforcement. Democrats have cited concerns about federal enforcement practices, while Republicans argue that DHS funding is necessary to maintain border security and government operations.
“Senate Democrats will not provide the votes to proceed to the appropriations bill if the DHS funding bill is included,” Schumer said in a statement, Investopedia reported.
Betting markets priced in high chances of a shutdown. The odds of another shutdown in January were 75 percent on betting site Polymarket, up from 9 percent on Friday.
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“If we were having this conversation a week ago, I would have said the government is probably going to stay open,” said Stifel’s Chief Washington Policy Strategist, Mr Brian Gardner, in an interview on CNBC Monday. “But the weekend changed the dynamics. I think we have to see how it plays out over the week….But a partial shutdown does seem to be the base case at this point.”
Reserves, oil price
One of the strongest signals supporting the naira’s recovery is the sharp rise in Nigeria’s external reserves. According to figures published on the CBN’s website, foreign reserves increased by 14.45 percent to $46.11 billion on January 28, 2026, from $40.29 billion recorded on December 2, 2024.
Also, crude oil prices rose Thursday to reach their high levels since September after the Trump Administration warned Iran might face military strikes if the country did not negotiate a new nuclear agreement.
The price of Brent crude oil jumped as much as 4.3 percent to briefly cross $70 per barrel for the first time since September 2025 before paring gains. The US pricing benchmark, West Texas Intermediate crude, gained as much as 4.7 percent to trade above $65 at its highs of the day.
“Oil markets are rapidly repricing geopolitical risk as the probability of direct US action against Iran rises,” said Rystad Energy Head of Geopolitical Analysis, Mr Jorge Léon.
“The speed of the oil price reaction suggests markets see US military action against Iran as a real, near-term risk.”
