The Nigerian Naira has shown signs of strengthening against the Euro (EUR), particularly in the parallel (black) market.
Latest price action at the official market showed the Nigerian currency settled at N1715/€ from N1,729/ /€ at the last day in September.
The naira’s bullish run against the European currency comes as the Eurozone’s second-largest economy, France, faces political unrest.
The situation in France worsened in September and October 2025, marked by budget disputes, nationwide strikes, and government collapses.
Political unrest in France boosts Nigerian currency
Sébastien Lecornu has the shortest tenure in the Fifth Republic, having been appointed the French Prime Minister on September 9 and resigning shortly after on October 6, after he presented his cabinet.
This abrupt change instilled immediate market anxiety, causing borrowing costs to surge and leading to a decline of over 1.3 per cent in the French stock market (CAC 40).
François Bayrou was earlier ousted as France’s prime minister after just nine months in office due to controversial austerity measures included in the budget, which prompted Moody’s to downgrade France’s credit rating amid concerns over fiscal fragmentation.
The French Republic has been grappling with an increasingly severe political crisis since the snap legislative elections in 2024. These elections resulted in a divided parliament, with power split between the far-right National Rally, the far-left New Popular Front, and the centrist party of President Emmanuel Macron.
The atmosphere of instability was further highlighted by the massive turnout of over 195,000 protesters on October 1 and 2. Unions such as the CGT organized nationwide strikes against the proposed budget cuts and advocated for a wealth tax on the ultra-richThis ongoing instability has driven investors away from the Euro, increasing demand for safe-haven assets like the US Dollar. Interestingly, this has indirectly benefited emerging market currencies like the Naira, which is currently supported by Nigeria’s foreign exchange reforms.
The resilience of the Naira can be attributed to interventions by the Central Bank of Nigeria (CBN), improved dollar inflows, and its relative stability compared to the Eurozone’s debt issues, evident in France’s debt-to-GDP ratio, which exceeds 110%.
Nigerian fundamentals brighten Naira’s outlook
Recent reforms by the Central Bank of Nigeria (CBN), along with a rise in foreign reserves and a significant decrease in speculation in the foreign exchange market, have contributed to one of the most impressive recoveries of the naira in recent history.
The external reserves have increased to $43 billion, bolstering market confidence.
The foreign exchange market in Nigeria is transforming due to CBN’s reforms, which include the integration of exchange rates, the implementation of the FX Code, and the introduction of the Electronic Foreign Exchange Matching System.
These reforms aim to reduce foreign exchange backlogs, which are estimated to be over $7 billion, and consolidate various exchange rates into a more transparent system.
Additionally, the CBN has worked to increase liquidity by attracting inflows from foreign portfolio investors and international oil companies while enhancing compliance with foreign exchange market regulations. The CBN has reduced speculative activity and distortions that previously exerted significant downward pressure on the naira by improving liquidity and enforcing regulations.
U.S dollar index hit two-month high
The dollar nearly reached a two-month high as concerns over economic and fiscal issues affected the currencies of its Group 10 peers in Europe and the Asia Pacific.
The Dollar Spot Index approached its highest level since early August. Political unrest in France has intensified following the resignation of newly appointed Prime Minister Sébastien Lecornu, who stepped down shortly after forming his cabinet. This resignation has worsened coalition instability and allowed far-right parties to gain traction.
Concerns about governance in the Eurozone have resurfaced, as Germany’s economic output has dropped to a three-month low, and France’s manufacturing activity has seen its largest decline since May 2020. Meanwhile, the US dollar has rebounded after hitting its lowest point in over two years. The negative impacts of the US government shutdown have been overshadowed by a series of unfavorable events overseas, which have contributed to this recovery.
