Key points
- The naira appreciated to N1,557/€1 on Friday from N1,570/€1 in the previous session.
- The EUR/NGN exchange rate has traded within a narrow N1,561–N1,577 range since early July.
- The euro has retreated significantly from its January 2026 peak of about N1,774/€1.
- CBN’s tight monetary policy and elevated interest rates continue to support foreign portfolio inflows and exchange rate stability.
Main story
The Nigerian naira extended its gains against the euro on Friday, appreciating to N1,557 per euro at the official market from N1,570/€1 recorded in the previous trading session, as the Central Bank of Nigeria’s tight monetary stance continued to support exchange rate stability.
Latest data from the Central Bank of Nigeria (CBN) showed the local currency has remained resilient against the European currency, with the EUR/NGN pair trading within a relatively narrow band of N1,561 to N1,577 since the beginning of July.
The latest performance marks a significant recovery from January 2026, when the euro climbed to nearly N1,774, before retreating to multi-month lows around N1,555 as market conditions improved.
The appreciation reflects sustained confidence in the naira following a series of monetary tightening measures implemented by the apex bank to curb inflation, improve liquidity management and attract foreign portfolio investment.
The CBN’s benchmark interest rate of 26.5 per cent has continued to encourage capital inflows into fixed-income securities, helping stabilise the foreign exchange market while moderating pressure on the local currency.
Meanwhile, the euro traded around $1.14 against the US dollar during Friday’s London session, as investors assessed the European Central Bank’s policy outlook alongside expectations of further interest rate increases by the US Federal Reserve.
The issues
Although the naira has recorded improved stability in recent months, analysts say external developments remain a major source of risk.
Heightened geopolitical tensions in the Middle East, rising crude oil prices and renewed global trade disputes could strengthen demand for the US dollar as a safe-haven asset, increasing pressure on emerging market currencies.
At the same time, expectations of further monetary tightening by the US Federal Reserve could redirect capital flows toward dollar-denominated assets, potentially reducing foreign investment into frontier markets such as Nigeria.
Domestically, sustaining exchange rate stability will depend on continued foreign exchange inflows, disciplined monetary policy and improvements in external reserves.
What they’re saying
The European Central Bank (ECB) maintained its benchmark interest rates unchanged after its June policy adjustment, reaffirming its commitment to returning inflation to its medium-term target of 2 per cent.
The ECB also noted that uncertainty remains elevated, particularly regarding the full impact of higher energy prices on inflation across the euro area.
Meanwhile, market pricing tracked by the CME FedWatch Tool indicates growing expectations that the US Federal Reserve could resume interest rate increases later in the year, with investors assigning a high probability to another rate hike by September.
What’s next
Market participants will closely monitor upcoming monetary policy decisions by both the CBN and major global central banks for further direction on currency markets.
Investors will also watch developments surrounding global trade tensions, geopolitical risks and oil prices, all of which could influence capital flows, exchange rate movements and the naira’s performance against major international currencies.
Bottom line
The naira’s appreciation against the euro underscores the impact of the CBN’s tight monetary policy in stabilising the foreign exchange market. However, sustaining these gains will depend on continued policy discipline, robust foreign capital inflows and the ability to withstand mounting global economic and geopolitical headwinds.
