Naira Drops to ₦1,378 Amid Ongoing Iran–US War

The Nigerian naira weakened to ₦1,378 against the US dollar on Monday as escalating conflict between the United States and Iran, alongside related tensions in the Middle East, unsettled global markets and drove demand for safer currencies.

Investors responded to rising geopolitical risk by moving capital into the US dollar, putting pressure on the naira in Nigeria’s foreign exchange market. 

The heightened conflict began with coordinated military action by the United States and Israel against targets in Iran, prompting sharp retaliation from Tehran.

The situation has created uncertainty in global energy markets, particularly around the Strait of Hormuz, a key shipping route through which almost one-fifth of the world’s crude oil supply passes daily. 

Oil prices have already climbed significantly amid fears of supply disruption, with Brent crude rising above $80 per barrel. Higher crude prices influence Nigeria’s economy in complex ways.

As an oil exporter, Nigeria could benefit from increased export revenues if higher oil prices persist, potentially boosting foreign exchange inflows and external reserves. However, the conflict has also contributed to volatility and risk aversion among international investors. 

This recent depreciation of the naira reflects broader trends affecting emerging market currencies during periods of geopolitical tension. Investors often reduce exposure to assets perceived as riskier, like frontier market currencies, and increase holdings in stable instruments such as the US dollar and US Treasury bonds.

According to analysts, this shift can weaken currencies like the naira as global capital flows tighten and demand for dollars rises. 

For the average Nigerians, a weaker naira tends to raise the cost of imported goods and services. This includes items like fuel, food staples, vehicles and industrial inputs, which could contribute to rising consumer prices and inflationary pressures in the months ahead. 

The situation also comes amid warnings that inflation in Nigeria might rise further as global energy markets remain unsettled and freight and insurance costs increase due to heightened risk premiums tied to conflict zones. 

Experts say stabilising the naira will depend on improved foreign exchange inflows, stable global conditions and policy responses from the Central Bank of Nigeria. With the Iran–US conflict unfolding abroad, its impacts on Nigeria’s currency and economy are likely to persist for some time.