Naira Trades High, British Pound Rises as FX Traders Abandon Dollar

• The British pound has risen to a new high amid massive dumping of the US dollar following the renewed trade war with Europe by the US government
• Data from the foreign exchange market indicated that the sterling traded at 1.3538 on Friday, May 23, 2025, gaining 1.93% against the dollar
• Meanwhile, the Nigerian currency, the naira, also experienced a massive jump against the dollar, trading at N1,579 per dollar 

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

The British pound sterling rose to a new high in the FX market in the week ending May 23, 2025, amid growth forecasts due to sales data.

Information from the foreign exchange market showed that the sterling was exchanged at 1.35.38 on Friday, May 23, 2025, as the pound gained 1.93% against the USD.

Investors dump the dollar for the pound sterling

According to reports, investors dumped the US greenback as President Donald Trump’s administration renewed the trade war, threatening to slap the European Union with higher tariffs, thereby strengthening the pound.

MarketForces Africa reports that the market saw the pound/dollar pair grow to a new three-year high of $1.34.80 after a renewed retail report excited traders about the UK economy and its currency.

According to the report, UK retail sales rose higher than expected in April due to warmer weather that helped food stores rebound.

Data from the Office for National Statistics said that retail volumes increased 1.2% in April after a 0.1% increase in March.

Findings by the Wall Street Journal showed that economists had expected a 0.3% rise.

UK sales improve on pound rebound

The report said the development was the fourth consecutive monthly increase since 2020 after businesses reopened following the first COVID-19 pandemic lockdowns.

Volumes increased by 1.8% in the three months to April, relative to the three months to October, the largest in almost four years.

According to the statistics office, sunny skies and warm temperatures boosted retail sales in April, with robust trading across major sectors. 

Reports said store sales increased by 3.9%, recovering from the February and March falls. However, clothing sales dropped in April despite growth in department stores and household goods shops.

The US dollar dipped across the board on Friday, May 23, 2025, as investors dumped the currency following Trump’s reactivation of his trade war, saying that the EU would be hit with 50% tariffs from June 1.

The dollar crashes against the dollar

The development comes as the reforms embarked on by the Central Bank of Nigeria (CBN) seem to be paying off, as the local currency is beating global shocks to maintain stability.

The naira continued its rally against the US dollar on the Nigerian Foreign Exchange Market (NFEM) on Friday, May 23, 2025, recording the highest gain in 30 days.

The naira gains as the CBN gives reasons

Data from the CBN shows that at the close of trading on Friday, May 23, 2025, the Nigerian currency rose to N1,579 per dollar, up from N1,583.92 it traded the previous day.

The naira has continued its upward swing in May, rising from N1,612 as of May 7, 2025, the lowest this month.

Olayemi Cardoso, the governor of CBN, has attributed the naira’s stability to reforms by the bank.

He said the naira’s stability stems from policies and reforms implemented by the CBN to improve liquidity and boost confidence in the FX market, he said.

Speaking at the Monetary Policy Committee (MPC) meeting of the bank, Cardoso said the current naira stability has enhanced the country’s economic outlook, stating that the naira is now globally competitive.

Experts praise the CBN

Experts have praised the CBN for its reforms that helped to keep the naira stable.

“The naira is rallying despite the drop in crude oil prices and slightly depleted reserves. It means that CBN must have got its act together to pull this off,” Jane Ogochukwu, senior banker and economist, told Legit.ng.

Ogochukwu disclosed that the wide disparity between the parallel and the official markets has almost disappeared, achieving the foreign currency reform aims of the Nigerian government.

Meanwhile, at the end of trading on Friday, May 23, 2025, currency dealers quoted the dollar at a high of N1,585 and a low of N1,575.10.

CBN releases new dollar exchange rates for banks

Legit.ng earlier reported that the Nigerian currency, the naira, has continued its rally against the dollar, closing positively in the Nigerian Foreign Exchange Market (NFEM) on Tuesday, May 20, 2025.

The naira has been on a week-long surge against the dollar, remaining mostly stable for the second week of May 2025.

The Central Bank of Nigeria (CBN) has attributed the naira’s surge to reforms in the FX markets.

Source: Legit.ng