Market News

AMID rising tensions in the Middle East that have rattled global financial markets, Nigeria’s currency—the Naira—has emerged as an unexpected pillar of stability among frontier market currencies, according to a new research note released by Citibank NA on March 11.

The report suggests that Nigeria’s status as a major oil exporter is shielding the Naira from the wave of capital flight currently affecting several emerging and frontier economies. Analysts say the surge in global crude oil prices, with Brent crude nearing the $90 – $100 per barrel mark, is generating a commodity windfall that is helping stabilise the currency and supports the banking system.

Strategists at Citibank NA, led by Katie Kironde, noted that investors are increasingly differentiating between Africa’s oil exporters and import-dependent economies.

The report highlighted a sharp divergence between Nigeria and Egypt, Africa’s two largest economies. While foreign investors have been increasing their exposure to Nigerian assets, they have reduced their positions in Egypt, whose currency has struggled amid rising energy import costs.

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“The Egyptian pound is currently the worst-performing currency in Africa this year,” the strategists wrote, adding that investors are seeking markets that benefit directly from higher oil prices.

For Nigeria, the biggest support for the Naira is the surge in dollar inflows tied to oil exports. With crude prices trading significantly above Nigeria’s 2026 budget benchmark, the country’s foreign-exchange position has strengthened considerably.

Data shows that foreign reserves held by the Central Bank of Nigeria recently climbed to a 13-year high of $50.45 billion, giving the apex bank stronger capacity to stabilise the currency market and support banking sector liquidity.

Analysts say this reserve accumulation is also improving confidence among international investors and domestic banks, helping reduce volatility in the foreign exchange market.

Nigeria’s trade balance has also improved as higher oil revenues increase the supply of dollars entering the economy. Unlike energy-importing countries that must spend more foreign currency to purchase fuel, Nigeria benefits directly from rising oil prices.

The report also pointed to similar resilience in Ghana, where a diversified export base—including gold, oil and cocoa—has helped shield the country from the financial shock triggered by the Middle East conflict.

However, Citi warned that the ongoing crisis could trigger a new “devaluation wave” among energy-poor African economies.

Countries such as Kenya and Ethiopia face a “dual shock” of rising fuel import costs and a stronger US dollar, as global investors move funds into safer assets.

Nigeria’s advantage, the report noted, is also linked to policy measures introduced by the Central Bank of Nigeria, including foreign exchange stabilization strategies and the growing role of domestic refining capacity led by the Dangote Petroleum Refinery.

These initiatives have reduced Nigeria’s dependence on imported fuel and helped cushion the economy from the “landed cost” pressures that typically accompany oil price spikes.