Naira Gains on Euro Amid CBN Tight Policy

Nigeria’s currency strengthened against the euro, appreciating to ₦1,552/€ in the foreign exchange market as the Central Bank of Nigeria’s (CBN) tight monetary policy continued to improve investor confidence and support exchange rate stability.

The naira’s latest gain reflects the impact of the CBN’s aggressive efforts to curb inflation, reduce excess liquidity and stabilise the country’s foreign exchange market. Over the past year, the apex bank has maintained a hawkish stance, keeping interest rates elevated while implementing reforms aimed at improving transparency and liquidity in the FX market.

Analysts say the currency’s resilience has been supported by increased foreign exchange inflows, stronger investor sentiment and a more stable supply of dollars through official market channels. These developments have helped narrow exchange rate volatility and strengthen the naira against major international currencies, including the euro.

The CBN has also intensified measures to improve price discovery in the foreign exchange market, clear outstanding FX obligations and encourage greater participation from foreign portfolio investors. These reforms have contributed to a gradual recovery in confidence after a prolonged period of currency pressure.

Economic experts note that maintaining tight monetary conditions has made naira-denominated assets more attractive to investors, leading to increased capital inflows and easing pressure on the exchange rate. While borrowing costs remain high for businesses and consumers, policymakers argue that the strategy is necessary to tackle inflation and restore macroeconomic stability.

Despite the recent appreciation, economists caution that sustaining the naira’s gains will depend on continued foreign exchange inflows, higher oil production and exports, stronger non-oil revenue and consistent implementation of ongoing economic reforms.

For businesses and importers, a firmer naira could help moderate the cost of imported goods and raw materials if the trend continues, while consumers may eventually benefit through lower inflationary pressure. However, analysts stress that long-term exchange rate stability will require sustained fiscal discipline, increased export earnings and deeper structural reforms beyond monetary policy alone.