The Nigerian naira strengthened against the euro during the week’s fourth trading session, closing at N1,606/€1 on Thursday, according to Central Bank of Nigeria (CBN) data — an improvement from N1,644/€1 recorded on Wednesday.
Market activity reflected sustained buying pressure for the local currency, easing the EUR/NGN rate. The naira’s recent resilience against major currencies, including the U.S. dollar and the euro, has been linked to improved foreign exchange inflows, fiscal reforms, trade surpluses, and stronger external reserve buffers.
Following years of steep depreciation, the local currency has shown firmer momentum in 2026. Nigeria’s external reserves — estimated at $46.7 billion — have strengthened the CBN’s ability to defend the currency and meet market demand. Monetary authorities have maintained a cautious stance on easing policy, keeping yields elevated to retain foreign investors even as inflation moderates from the peak recorded in late 2024.
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The apex bank cut its benchmark rate only once in 2025, retaining it at 27% at the November policy meeting. Tight monetary conditions continue to anchor inflation management and attract foreign portfolio inflows, supporting the naira.
External trade dynamics have also contributed to stability. Nigeria posted a sizeable trade surplus with the European Union — estimated at $10 billion in 2025 — largely driven by exports of oil, gas, cocoa, and other commodities. Germany, the Netherlands, Belgium, France, and Spain remain among the country’s key export destinations, highlighting the EU’s significance as a trading partner.
Trade relations continue under preferential frameworks and dialogue despite Nigeria’s resistance to joining the regional West Africa–EU Economic Partnership Agreement (EPA) due to concerns about protecting the domestic industry. Both parties reaffirmed commitments in early 2026 to expand cooperation in trade, investment, governance, digital economy, agriculture, security, and climate action, with a Nigeria–EU Ministerial Meeting scheduled for Abuja in March.
In contrast, the Eurozone faces subdued economic conditions. Inflation has eased to about 1.7%, below the ECB’s target, raising expectations of possible monetary easing. Growth projections remain modest at roughly 1.2% for 2026, tempering euro strength and indirectly allowing some room for emerging currencies to stabilise.
Ahead of the next EU summit, France has indicated it will push discussions on competitiveness and currency positioning, including the euro’s valuation relative to the dollar. European policymakers have also advocated expanding the euro’s international role to reduce reliance on the U.S. currency, arguing that wider euro-based trade settlements could lower costs and reduce exchange-rate volatility for exporters.
