The Nigerian naira is showing consolidation and relative stability against the euro after periods of severe volatility in previous years. The spot EUR/NGN rate is trading around N1,601/€.
The pair began the year at N1,684/€ (January 2), meaning the naira has recovered roughly 5.3% against the euro over the past five months. Volatility has fallen sharply in May, and a stable trading range between N1,587/€ and N1,607/€ has emerged, suggesting a temporary balance in official foreign-exchange windows and a decline in speculative pressure.
Monetary policy is the main driver of this shift. The Central Bank of Nigeria (CBN) has maintained a tight liquidity stance, keeping the Monetary Policy Rate (MPR) at 26.5 percent and conducting large open market operations (OMO) to mop up excess system liquidity.
In one month, the CBN issued N9.71 trillion in bills as part of that effort. These measures have raised short-term real yields on naira assets and helped attract foreign portfolio inflows, improving short-term dollar and euro liquidity in the domestic banking system.
Sustaining strict liquidity without choking real-sector growth will be key to the naira’s short-to-medium-term path. The N1,600/€ level stands as a psychological resistance for the euro: should OMO activity and benchmark rates remain high, the euro is likely to face selling pressure near that line.
Broader confidence gains are also supporting Nigeria’s external position. S&P Global Ratings recently upgraded Nigeria’s long-term sovereign rating from B- to B with a stable outlook, citing a more market-driven exchange-rate environment, an expanding tax base, and a falling debt-to-revenue ratio. Domestic supply-side improvements — notably the near-completion of the Dangote Refinery, which approaches its 650,000 barrels-per-day capacity — are helping preserve foreign-exchange reserves and shield the current account from large external shocks. The IFC and the CBN have also teamed up to mobilize over $1 billion to manage currency risks and expand local-currency financing across priority sectors.
External factors will continue to influence EUR/NGN. The euro is trading in a narrow $1.1670–1.1750 range against the dollar, and developments in the Middle East — including a reported US–Iran memorandum of understanding on a temporary ceasefire — could affect risk appetite and safe-haven flows. A de‑escalation may support riskier and exotic assets, while renewed tensions would likely boost the dollar and weigh on the euro.
ECB policy is another variable. Market pricing already reflects two 25-basis-point deposit-rate increases, with about a 50% chance of a third move within the year. ECB board member Isabel Schnabel has said the bank should raise rates in June despite ongoing peace talks, citing persistent inflationary pressure from elevated energy prices. Reuters economists remain more cautious, expecting two more hikes before a cut in mid‑2027.
