The Nigerian naira appreciated against major European currencies during Thursday’s trading session, extending its recent run of gains amid improved foreign exchange inflows, strong external reserves, and favourable trade balances.
Data from the Central Bank of Nigeria (CBN) showed the naira closed at N1,606 to €1 on Thursday, strengthening from N1,644 to €1 recorded on Wednesday.
The modest but notable appreciation reflects sustained bullish sentiment for the local currency and easing pressure on the EUR/NGN exchange rate.
Analysts attribute the naira’s renewed strength to multiple macroeconomic improvements, including increased foreign exchange inflows, fiscal reforms, and stronger external reserve positions.
Nigeria’s foreign reserves have risen to approximately $46.7 billion, providing the apex bank with greater capacity to stabilize the currency and meet market demand.
The naira has maintained bullish momentum since the beginning of 2026, marking a significant shift after years of sharp depreciation. Market watchers say improved liquidity in the foreign exchange market has boosted confidence among investors and traders.
The CBN has maintained a cautious monetary policy stance despite slowing inflationary pressures. The apex bank retained its benchmark interest rate at 27 percent following its last rate adjustment in 2025, a move aimed at preserving investor confidence and maintaining foreign capital inflows.
High interest rates have continued to attract foreign portfolio investors seeking higher yields, particularly those supplying dollar liquidity across West Africa.
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Analysts note that the policy has supported naira stability while helping to curb inflation, which has moderated since reaching a 28-year peak in November 2024.
Nigeria’s strong trade relationship with the European Union has also contributed to improved foreign exchange earnings. The country recorded an estimated $10 billion trade surplus with the EU in 2025, largely driven by exports of crude oil, natural gas, cocoa, and other commodities.
Key European trading partners including Germany, the Netherlands, Belgium, France, and Spain remain major destinations for Nigeria’s exports. The EU continues to be Nigeria’s most significant trading partner across both oil and non-oil sectors.
Although Nigeria has historically resisted signing the West Africa Economic Partnership Agreement (EPA) due to concerns about protecting local industries, trade between both parties continues under alternative preferential arrangements.
Both Nigeria and the EU have reaffirmed commitments to deepen cooperation across trade, investment, security, governance, agriculture, digital economy, and climate initiatives.
The next Nigeria-EU Ministerial Meeting is scheduled to hold in Abuja in March 2026, where both sides are expected to explore further economic collaboration.
Meanwhile, economic developments within the Eurozone are also influencing currency movements. Inflation across the Eurozone has declined to 1.7 percent, falling below the European Central Bank’s (ECB) 2 percent target. This has triggered speculation that the ECB may consider interest rate cuts in the near term.
Economic growth in the Eurozone remains modest, with projections estimating expansion at 1.2 percent in 2026, a factor that could limit further gains in the euro and create room for emerging market currencies, including the naira, to strengthen.
French President Emmanuel Macron is expected to raise concerns about the euro’s valuation during an upcoming European Union summit. Discussions are expected to focus on strengthening the Eurozone’s competitiveness and addressing exchange rate challenges, particularly against the US dollar.
The euro-dollar exchange rate has recently gained momentum following comments from former U.S. President Donald Trump suggesting he was unconcerned about the dollar’s weakening position. The development has raised concerns within the ECB about the possibility of inflation falling below target levels.
European policymakers are also pushing to expand the global role of the euro to reduce dependence on the US dollar. Increased international usage of the euro could lower transaction costs for exporters and stabilize price movements by reducing exchange rate volatility.
Currency analysts believe the naira’s near-term outlook will largely depend on sustained foreign exchange inflows, consistent monetary policy discipline, and global commodity price trends.
While recent improvements signal growing stability, market participants caution that maintaining investor confidence and export competitiveness will remain crucial to sustaining the currency’s recovery trajectory.