Nigeria’s Naira has successfully exited Africa’s top 10 worst performing currencies list, marking a significant turnaround after nearly two years of sharp devaluations. This positive shift is attributed to a combination of improving external reserves, crucial policy reforms, and enhanced liquidity conditions within the Nigerian economy. The analysis, which utilized the Forbes currency calculator, shows the naira’s exit from the bottom ten occurred in October 2025 and it remained outside this list through December. While an exact ranking wasn’t provided, by the close of 2025, the naira was trading at N1,436 against the dollar, positioning it among Africa’s 15-20 weakest currencies, a notable improvement from its previous standing. The Central Bank of Nigeria (CBN) data reveals a year-on-year appreciation of the naira by 6.5 percent, a welcome change from N1,535.82 recorded at the same period in 2024. This recovery follows a period of intense currency stress that began with President Bola Tinubu’s early-term reforms, including the removal of currency controls and significant devaluations in mid-2023 and early 2024. These reforms, though initially challenging, have ultimately contributed to reduced volatility and a strengthened Nigerian external position, as evidenced by rising foreign-exchange reserves and a healthy current-account surplus, according to the World Bank’s latest Africa Pulse report. What is the impact of currency stability on inflation? Exchange-rate stability has emerged as a key factor in easing inflation pressures. The naira’s improved performance has coincided with a sharp deceleration in headline inflation, which fell from 24.48 percent in January to 14.45 percent by November 2025. Average inflation also saw a significant decline to 20.96 percent in 2025, down from 33.2 percent in 2024 and 24.66 percent in 2023. This moderation is a direct result of reduced currency pressures, lower petrol costs, and more stable supply chains, leading to outright price declines in several food items and imported consumer goods. The World Bank projects that a more competitive naira will continue to support export diversification and compress imports. However, the report also cautions that price pressures are expected to remain elevated, necessitating sustained monetary policy efforts to re-anchor inflation expectations. The journey towards disinflation remains susceptible to exchange-rate pressures, supply shocks, and global market volatility, underscoring the need for continued vigilance. The average official exchange rate experienced a significant weakening in 2024, moving from N645.10/$ in 2023 to N1,450/$ in 2024. Throughout the first eight months of 2025, the naira fluctuated primarily between N1,500 and N1,600 per dollar. However, a notable strengthening occurred on September 26, 2025, when it reached N1,480.30/$, its strongest point in eight months, and has largely remained below N1,500/$ since. Nigeria’s external reserves, a critical component for managing foreign exchange volatility, reached $45.48 billion as of December 30, 2025. This represents the highest level in six years, an increase from $40.88 billion a year prior. The apex bank’s macroeconomic outlook anticipates further growth in reserves to approximately $51.04 billion in 2026, driven by improved FX liquidity, increased oil earnings, sovereign bond issuance, and stronger diaspora remittance inflows. Before its exit from the bottom ten, the naira was ranked as the ninth weakest currency in Africa in September 2025, a slight improvement from its sixth-place ranking the previous month. The stability observed in the exchange rate, with the naira trading within the N1,440–N1,500/$ band, has been a significant achievement. This periodic marginal appreciation has bolstered business confidence, reduced imported inflation, and restored predictability in pricing, contracting, and investment planning, according to Muda Yusuf, director-general of the Centre for the Promotion of Private Enterprise (CPPE). Structural developments are also playing a vital role in supporting the naira. The commencement of operations at the Dangote Refinery, the world’s largest single-train refinery with a capacity of 650,000 barrels per day, has significantly reduced the demand for refined product imports and, consequently, FX outflows. Refined product imports dropped to 3.1 million tonnes in the first quarter of 2025. Furthermore, Nigeria’s renewed currency-swap agreement with China facilitates trade settlements in yuan and naira, thereby easing dollar demand. In 2024, Nigeria’s imports from China amounted to N14.14 trillion ($9.56 billion), with exports exceeding N3 trillion ($2.03 billion). The CBN anticipates further capacity expansion at the Dangote Refinery to 700,000 barrels per day in 2025, with a medium-term target of 1.4 million barrels per day, which is expected to further curb import dependence, aid reserve accumulation, and reinforce FX stability. While Nigeria’s naira has climbed out of the bottom ten, the continent’s strongest currencies are led by the Tunisian dinar, followed by the Libyan dinar, Moroccan dirham, Ghanaian cedi, and Botswanan pula. Other strong currencies include the Seychellois rupee, Eritrean nakfa, Swazi lilangeni, South African rand, and Namibian dollar. What are the key structural developments supporting the Naira? Key structural developments supporting the Naira include the operationalization of the Dangote Refinery, reducing refined product import demand and FX outflows, and a renewed currency-swap agreement with China that allows for trade settlements in yuan and naira. These factors collectively ease dollar demand and bolster FX stability. The journey of the naira highlights the complex interplay of economic reforms, global market forces, and structural improvements. The positive trend suggests a more stable economic outlook for Nigeria, although continued vigilance and policy adjustments will be crucial to sustain this momentum and navigate future challenges. The country’s ability to manage inflation and maintain FX liquidity will be paramount in solidifying the naira’s position and fostering long-term economic growth.
