Market News

Nigeria’s naira has shown signs of stabilisation in recent months, diverging from global oil price trends and signaling a shift in the currency’s traditional dependence on crude earnings, according to a new Bloomberg report.

Analysts say the naira’s relatively flat performance in the first half of 2025, despite continued declines in international oil prices, reflects growing confidence in Nigeria’s macroeconomic reforms and evolving foreign exchange dynamics.

The currency traded around N1,530 to the U.S. dollar on Tuesday, aligning closely with its six-month average of N1,556.

According to Bloomberg, Deutsche Bank AG and CardinalStone forecast that the naira will likely close the year near that average rate, after recording a sharp 41 per cent depreciation in 2024.

Commenting on the development, Ayo Salami, Chief Investment Officer at Emerging Markets Investment Management Ltd. in London, said the naira’s current level may be supported by broader structural shifts.

“The currency is trading below its fair value based on purchasing power parity,” Salami said, pointing to factors such as higher non-oil export volumes and a drop in import demand as contributing to the relative stability.

Nigeria’s trade profile has shifted over the past year, with reduced reliance on imported refined petroleum products and a weakening U.S. dollar also cited as supporting factors for the naira.

The Central Bank of Nigeria’s decision to allow the naira to float more freely in 2023 and 2024 contributed to earlier volatility, but observers now see a more stable environment emerging for businesses and investors.

Meanwhile, Nigeria’s financial markets have responded positively. A Bloomberg index tracking local bond performance reached a new high, posting a 19 per cent return in the first half of the year—its strongest since December 2020. The Nigerian stock market has gained 18 per cent in the same period, while a broader emerging-market local debt index rose 12 per cent.

Samir Gadio, Head of Africa Strategy at Standard Chartered Bank, said global investor sentiment has shifted, further strengthening Nigeria’s position. “The NGN has become more correlated with global risk conditions,” Gadio noted. “Risk conditions have since improved materially; this has supported renewed portfolio flows into Nigeria debt, even with oil prices currently below \$70 per barrel.”

Analysts continue to monitor whether the current stability will be sustained in the second half of the year, particularly in light of ongoing fiscal and monetary policy adjustments.