The naira extended its upward momentum against the euro on Wednesday, March 18, 2026, closing at N1,556/€1 in Nigeria’s foreign exchange market, as improved investor sentiment and global currency dynamics combined to support the local unit.
The latest movement represents a notable appreciation from levels around N1,624/€1 recorded on March 10, underscoring a sustained strengthening trend over the past nine days. The roughly 3.6 per cent gain signals a short-term bearish outlook for the EUR/NGN pair, with the euro weakening steadily against the naira.
Market analysts link the rally primarily to renewed appetite for naira-denominated assets, driven by elevated yields in the fixed-income market and continued foreign portfolio inflows. The Central Bank of Nigeria has maintained liquidity support through instruments such as Open Market Operation (OMO) bills, helping stabilise the currency despite broader macroeconomic adjustments.
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From a technical standpoint, the pair is approaching critical levels. Analysts note that maintaining strength below the N1,605/€1 threshold reinforces the current downtrend, while a break above N1,625/€1—the recent peak—could signal a reversal in favour of the euro. Immediate support is seen around N1,550/€1.
Recent monetary policy adjustments have added nuance to the outlook. The central bank’s decision to cut interest rates by 50 basis points to 26.5 per cent would typically exert downward pressure on the naira. However, investors appear to interpret the move as a signal of improving macroeconomic stability, supported by external reserves projected to climb to $51 billion by the end of 2026.
In real terms, the naira has also benefited from moderating inflation, which is trending toward a 12.4 per cent target. The unification of exchange rate windows has further reduced arbitrage opportunities, contributing to a more transparent and efficient FX market.
Globally, currency movements have also tilted in the naira’s favour. The euro has weakened against the U.S. dollar, slipping below the 1.15 mark during the week. This follows a strengthening of the greenback, supported by hawkish signals from the Federal Reserve and heightened geopolitical tensions.
The dollar has appreciated by about 2.7 per cent against the euro since the start of the year and 3.7 per cent over the past month, reflecting investor preference for safe-haven assets amid rising uncertainty.
At the centre of these global shifts is the escalating conflict involving Iran, which has disrupted energy markets and heightened inflation risks. Military tensions have affected oil supply routes, particularly the Strait of Hormuz, a critical corridor for roughly 20 per cent of global oil and liquefied natural gas flows.
The resulting supply shock pushed Brent crude prices close to $120 per barrel before easing to around $101.60, still significantly higher than pre-conflict levels below $73. The surge in energy prices has intensified fears of stagflation, as economies grapple with slowing growth alongside persistent inflation.
Despite these pressures, the United States—still the world’s largest crude producer—has shown relative resilience, further underpinning dollar strength.
In its latest policy decision, the Federal Open Market Committee of the Federal Reserve held benchmark interest rates steady at between 3.5 and 3.75 per cent, citing uncertainty over the economic implications of Middle East tensions. Policymakers signalled a cautious outlook, with projections pointing to modest rate cuts in 2026 and 2027.
Overall, the naira’s recent appreciation against the euro reflects a confluence of domestic policy support, improved investor confidence, and favourable external currency dynamics, though analysts caution that volatility in global energy markets and monetary policy shifts could quickly alter the trajectory.
