The naira slipped to N1,550/$ amid falling oil prices following the Israel Iran ceasefire. Analysts warn of further pressure on Nigeria’s FX market

The Israel Iran ceasefire naira impact continues to ripple through global markets, with Nigeria’s local currency taking a fresh hit.

Also read: Naira strengthens further against dollar in official market

On Tuesday, the naira weakened to N1,550 per dollar in the official Nigerian Foreign Exchange Market (NFEM), falling from N1,547/\$ last Friday.

In the parallel market, it hovered around N1,600/$, reflecting growing FX demand and tighter dollar inflows.

Data from the Central Bank of Nigeria (CBN) confirmed the local unit’s latest depreciation, which analysts link to a dip in global crude oil prices following easing tensions in the Middle East.

Global oil benchmarks fell below *$70 per barrel, shortly after U.S. President Donald Trump announced a complete ceasefire agreement between Israel and Iran.

White House officials added that Israel’s compliance depended on Iran’s sustained peace, while Tehran confirmed it had accepted the truce terms following indirect negotiations brokered by Qatar and U.S. allies.

Crude oil remains Nigeria’s primary source of FX earnings, accounting for more than 90 per cent of export income.

The sudden drop in prices thus narrowed fiscal expectations, raising concerns over the nation’s revenue projection benchmarked at $75 per barrel in the 2025 budget.

“The naira is incredibly sensitive to oil price movements. A decline triggered by the ceasefire is positive for global stability but negative for Nigeria’s fiscal space,” said FX analyst Abdulrahman Musa of Sterling Macro.

In an attempt to absorb excess liquidity and bolster monetary stability, the CBN conducted an Open Market Operations (OMO) auction across two tenors—155 days and 204 days—offering a total of ₦1.14 trillion.

The apex bank eventually allotted ₦1.07 trillion, with stop rates of 24.2% and 24.6% respectively, signalling a move to tighten naira liquidity and defend the currency.

The naira is incredibly sensitive to oil price movements. A decline triggered by the ceasefire is positive for global stability but negative for Nigeria’s fiscal space.

Meanwhile, the U.S. Dollar Index dropped to 98.25 after President Trump celebrated what he called “The 12-Day War” ceasefire via a post on Truth Social.

Trump praised both nations for showing “stamina and courage” and confirmed that Iran had agreed to halt missile launches, while Israel committed to suspend further airstrikes—pending Iran’s adherence.

Still, the international diplomatic picture remains fragile.

Iran’s foreign minister insisted that true peace could only follow a full cessation of Israeli hostilities, while reports from SNN indicated that Iran fired one last volley of missiles just hours before the agreement took effect.

As global uncertainty settles, attention shifts to U.S. domestic policy. Investors now await remarks from Federal Reserve Chair Jerome Powell and the Consumer Confidence Report scheduled for Tuesday.

The market is closely watching for dovish signals, especially amid softening oil prices and recent Fed statements pointing toward a possible rate cut by September.

Christopher J. Waller, a member of the Federal Reserve Board, suggested a July rate cut was “not off the table.” However, data from the CME FedWatch tool indicates that most analysts still expect easing to begin later in Q3.

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For Nigeria, the broader picture remains mixed. While geopolitical de-escalation is welcome, reduced oil earnings may strain foreign reserves, deepen fiscal stress, and push the naira further off course unless demand-side pressures are contained.