The naira continued its strong performance against the euro in Nigeria’s forex market Wednesday.
Since March 10, it climbed from a high of ₦1,624/€ to ₦1,556.
Moreover, traders say investors actively sought naira-denominated assets, driving this recent rally in the market.
Naira Gains Momentum
Consequently, the Euro/Naira pair entered a short-term bearish phase, with the euro trending downward.
In just nine days, the euro fell nearly 3.6% from its recent peak of ₦1,624.8.
Therefore, analysts warn naira bulls must defend ₦1,605/€ to maintain current momentum.
Otherwise, breaking above ₦1,625 would allow the euro to regain dominance, threatening recent gains.
Policy Support
Additionally, the Central Bank cut interest rates by 50 basis points to 26.5%, boosting confidence.
Although lower rates usually weaken currency, Nigeria’s strong reserves convinced investors to trust the naira.
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Furthermore, external reserves should reach $51 billion by the end of 2026, enhancing stability.
Meanwhile, inflation has begun easing toward 12.4%, improving the naira’s real value in markets.
Also, high-yield OMO bills encouraged foreign portfolio investment, actively providing liquidity to support the naira.
Global Pressures
On the global stage, Middle East tensions disrupted oil supply, challenging the euro significantly.
As a result, Brent crude soared from $73 to nearly $120 per barrel before easing to $101.60.
Moreover, the Strait of Hormuz, vital for 20% of global oil and LNG, faced severe blockages.
Consequently, the US dollar surged against the euro, reflecting global investor caution amid uncertainty.
Despite these shocks, Nigeria’s policies and stabilising economy enabled the naira to seize opportunities.
Finally, the coming weeks will reveal whether the naira’s rally represents a sustained recovery story.
