Naira Gains Strength as Oil Price Volatility Loses Grip – Nigeria’s Currency Shows New Stability
written Story, By Okafor Joseph
Nigeria’s Naira Defies Oil Price Swings, Gains Stability on Strong Non-Oil Exports and Refining Boom
Nigeria’s currency, the naira, is showing surprising resilience by breaking its historical link with oil price fluctuations — a shift driven by undervaluation, rising non-oil exports, and a sharp drop in petroleum product imports.
Despite some early-year turbulence, the naira has stabilized even as global crude oil prices declined. Analysts from Deutsche Bank AG and CardinalStone Partners project that the naira will likely end 2025 close to ₦1,556 per US dollar — aligning with its average exchange rate during the first half of the year, after a sharp 41% depreciation in 2024. As of Tuesday, the naira traded at around ₦1,530 to the dollar, steady on a year-to-date basis.
Ayo Salami, Chief Investment Officer at Emerging Markets Investment Management Ltd. in London, explains that the naira remains undervalued on a purchasing power parity basis. “Higher non-oil exports and reduced import needs have helped shield the naira from oil’s price swings,” Salami noted.
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Businesses that have struggled with steep currency devaluations over the past two years are finding relief in this newfound stability. The Central Bank of Nigeria’s decision to allow more market-driven FX trading, a softer US dollar — down more than 10% this year — and a reduced reliance on imported refined fuel have all contributed to the naira’s steadiness.
Africa’s richest man, Aliko Dangote, launched a massive 650,000 barrels-per-day refinery that is turning Nigeria into a net exporter of refined petroleum products. This shift, alongside foreign-exchange reforms and renewed investor interest in Nigerian assets, has attracted fresh dollar inflows.
A Bloomberg index tracking Nigerian local bond performance hit a record high, delivering a 19% return this year — its strongest first-half showing since 2020. By comparison, the broader gauge for emerging-market local debt returned 12% in the same period, while Nigeria’s stock market is up 18% year-to-date.
“The naira (NGN) is now more influenced by global risk sentiment than oil alone,” said Samir Gadio, Head of Africa Strategy at Standard Chartered Plc. “Improved global risk appetite has boosted portfolio flows into Nigerian debt, even with oil prices hovering below $70 per barrel.”
With stronger non-oil exports, local refining capacity, and increased investor confidence, Nigeria’s naira appears to be rewriting its story — offering hope for a more stable foreign exchange outlook despite uncertain oil markets.
