Naira gains against Euro, breaks below N1,500 barrier after two years

The Nigerian naira has strengthened past the N1,500-to-the-euro threshold for the first time since April 2024, benefiting from both improved domestic foreign-exchange conditions and a sharp decline in the value of the euro against the US dollar.

Latest Central Bank of Nigeria (CBN) data showed the naira closing at N1,497/€, compared with levels around N1,684/€ late last year.

The latest move represents a significant recovery from the period following the 2024 FX reforms and naira devaluation, when the euro exchange rate climbed as high as N1,800.

The naira’s performance against the euro has also been supported by its relative stability against the dollar. The currency has recently traded within a narrow N1,327-N1,330/$ range in the official market, while the parallel-market dollar has largely remained between N1,370 and N1,390.

Market analysts say the narrowing gap between official and parallel-market rates suggests improved price discovery and reduced opportunities for currency arbitrage.

An economist and financial market analyst, Jide Babalola speaking on the development, said the naira’s appreciation against the euro should not necessarily be interpreted as a broad-based surge in the domestic currency.

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“The key factor is the euro-dollar cross-rate. If the euro weakens significantly against the dollar while the naira remains relatively stable against the dollar, the naira will automatically appreciate against the euro,” the analyst said.

He added that improved forex liquidity and the CBN’s reforms were helping to reduce speculative pressure on the naira.

The development coincides with a broad sell-off in the euro in international markets, where the common currency fell 0.8 per cent to about $1.1161, its weakest level since May 2025.

Investor concerns over political and fiscal risks in major Eurozone economies have contributed to the pressure.

Preparations for a possible early election in Spain have heightened political uncertainty, while concerns over France’s fiscal position have pushed the premium investors demand to hold French debt over German government bonds to its highest level since 2011.

Political uncertainty in France has also increased, with investors closely watching the country’s electoral outlook and the prospects of opposition parties.

A Lagos-based currency trader said the euro’s weakness could continue to support the naira-euro cross-rate provided the domestic currency maintains its relative stability against the dollar.

“Unless we see a significant reversal in the naira-dollar rate, further weakness in the euro could keep the naira firm against the European currency,” the trader said.

Analysts also point to stronger domestic forex fundamentals, including increased local petroleum refining capacity, particularly the Dangote Refinery, which has reduced Nigeria’s dependence on imported refined petroleum products and potentially eased demand for foreign exchange.

Improved trade flows, stronger agricultural exports and relatively favourable crude oil prices have also provided support for the country’s external position.

Another market analyst, however, cautioned that the naira’s gains against the euro should be viewed in the context of global currency movements.

“The sustainability of the move will depend more on Nigeria’s underlying dollar liquidity, reserves, oil earnings and capital inflows than on the euro’s weakness alone,” he said.