The Nigerian naira has strengthened significantly against the euro in 2026, buoyed by ongoing monetary and fiscal reforms as the Central Bank of Nigeria (CBN) maintained its benchmark Monetary Policy Rate (MPR) at 26.5 percent.
The euro has depreciated by about 5.4 percent against the naira, falling from approximately N1,684 at the beginning of the year to around N1,592.50 on Wednesday. The development comes amid a broader macroeconomic stabilization effort led by the CBN, which has helped the naira recover from its historic lows.
At the conclusion of its latest Monetary Policy Committee (MPC) meeting, the CBN retained the MPR at 26.5 percent, a move that has continued to attract foreign portfolio investments into Nigerian government securities.
CBN Governor, Olayemi Cardoso, told journalists that MPC members agreed that a cautious and vigilant monetary policy stance remains necessary to anchor inflation expectations and preserve macroeconomic stability.
According to Cardoso, recent economic reforms have significantly strengthened the country’s capacity to withstand external shocks, while the transmission of global commodity and energy price pressures to domestic inflation has been considerably reduced.
The apex bank has also intensified foreign exchange market reforms, adopting a “willing buyer, willing seller” framework, clearing substantial FX backlogs owed to investors, and granting Bureau de Change operators access to official dollar supplies to improve retail market liquidity and narrow the gap between official and parallel market rates.
Analysts say Nigeria is gradually rebuilding investor confidence through sustained fiscal and structural reforms, reshaping international perceptions of the naira and the broader economy.
Further boosting confidence, S&P Global Ratings recently upgraded Nigeria’s long-term sovereign credit rating from B- to B with a stable outlook, citing improvements in exchange-rate management, expanding tax revenues, and a gradual reduction in the country’s debt-to-revenue ratio.
The country’s energy sector reforms have also contributed to currency stability. With the Dangote Refinery approaching its full refining capacity of 650,000 barrels per day, Nigeria’s dependence on imported petroleum products is expected to decline, reducing pressure on foreign exchange demand.
Economists note that this structural shift could strengthen the nation’s current account position, enhance foreign exchange reserves, and improve resilience against global economic shocks.
In another positive development, the International Finance Corporation (IFC) recently partnered with the CBN to support local currency financing and manage foreign exchange risks across critical sectors, with plans to mobilize more than $1 billion into the Nigerian economy.
Euro faces pressure amid geopolitical and economic uncertainty
While the naira has gained ground, the euro continues to face headwinds in global currency markets due to heightened geopolitical tensions and evolving monetary policy expectations.
The euro-dollar pair (EUR/USD) was trading around 1.1624, retreating from highs near 1.18 recorded earlier in the month as investors reassessed global economic conditions.
Market sentiment has been influenced by the European Central Bank’s (ECB) increasingly hawkish posture amid rising inflationary pressures and geopolitical risks. Although the ECB maintained its core deposit facility rate at 2.0 percent and its main refinancing rate at 2.15 percent, concerns over rising energy costs linked to Middle East tensions have prompted upward revisions to inflation forecasts.
ECB policymakers have warned that additional policy tightening could become necessary if inflation remains persistent. Among them, Olli Rehn has cautioned that the Eurozone may face difficult policy choices to maintain credibility and return inflation to the ECB’s 2 percent target.
Meanwhile, currency markets remain sensitive to developments surrounding negotiations involving the United States and Iran, particularly over Tehran’s nuclear programme and tensions around the strategically important Strait of Hormuz.
At the same time, expectations of a potentially tighter monetary policy stance from the U.S. Federal Reserve have continued to support the dollar, limiting the euro’s gains despite the ECB’s hawkish rhetoric.
Analysts say concerns over slower economic growth across the Eurozone have also restrained the single currency’s upward momentum, even as policymakers signal readiness to combat inflation driven by elevated energy prices and geopolitical uncertainty.
