The naira has come under renewed pressure in the foreign exchange market, slipping to N1,385 per US dollar as escalating conflict in the Middle East sends shockwaves through global financial systems.
The local currency, which had previously shown signs of stability at N1,360, has depreciated by roughly 0.3 per cent over the past fortnight.
While Nigeria’s position as a leading crude exporter has provided a partial buffer against the global carnage, the domestic economy is beginning to feel the heat of “monstrous” volatility in the energy sector.
The exchange rate shift coincides with a dramatic spike in local energy costs.
Despite Nigeria’s inflation easing slightly to 15.06 per cent in February, the subsequent eruption of conflict in the Middle East has seen domestic gasoline prices soar by more than 30 per cent.
Market analysts at ForexTime Limited on Tuesday warned that these rising transportation and energy costs are likely to bleed into broader consumer prices, potentially undoing recent progress made by the Central Bank of Nigeria.
“As these tensions escalate, mounting fears of inflationary shocks could force central banks to rethink their 2026 playbooks,” noted Matthew Anthony, Senior Market Analyst for Africa.
The global backdrop remains grim, with Brent crude rallying above $103 a barrel on Tuesday.
Fears of supply shocks have intensified following attacks on energy infrastructure in the Middle East and ongoing concerns regarding ship traffic through the critical Strait of Hormuz.
In a desperate bid to stabilise prices, the International Energy Agency launched its largest-ever oil release of 400 million barrels, while the US issued a second temporary waiver for Russian oil purchases.
However, the “oil bulls” remain undeterred, keeping prices firmly in the triple digits.
The volatility is not limited to Nigeria. On Tuesday, the Reserve Bank of Australia raised interest rates for the second consecutive meeting, a move that many fear foreshadows a global trend.
Investors are now looking toward the Federal Reserve, European Central Bank, and Bank of England, all of which are under the spotlight this week.
Market expectations for a Fed rate cut have effectively evaporated, with traders now pricing in only one potential cut for the entirety of 2026.
“Ultimately, this has injected oil prices with monstrous levels of volatility… Iran’s attacks on energy infrastructure around the Middle East have intensified fears around supply shocks,” Anthony added.
For Nigeria, the immediate concern remains the CBN’s policy direction. The sudden spike in gasoline prices and the naira’s dip may force the apex bank to abandon its plans to lower interest rates as it pivots back to a defensive stance against conflict-induced inflation.
“The brief tech rally in the previous session merely served as a small distraction with equities on the back foot amid the overall caution,” the report concluded, signalling a week of high-stakes navigation for Nigerian policymakers.
