Naira Surges: Experts Say Nigeria’s Currency Now Among the World’s Most Competitive Currencies
- The naira’s strong comeback has made it the most competitive currency in almost two decades
- Experts attributed the milestone to currency reforms and growing investor confidence in Nigeria’s economy
- Nigerian economist, Yemi Kale, disclosed that the naira’s current exchange rate is the best it has been in two decades
Pascal Oparada, a reporter for Legit.ng, has over ten years of experience covering technology, energy, stocks, investment, and the economy.
Nigeria’s currency, the naira, is recording its strongest performance in over twenty years, emerging as one of the most competitive currencies globally amid a weakening U.S. dollar.
Experts say this milestone signals a turning point for Africa’s largest economy, one powered by reform, resilience, and growing investor confidence.
Source: Getty Images
Yemi Kale, Group Chief Economist and Managing Director at Afreximbank, made this revelation at The Platform Nigeria event in Lagos, describing the naira’s current exchange rate as “arguably the most competitive in two decades.”
A new era of currency reform
According to Kale, Nigeria’s foreign exchange market has been liberated from years of distortions.
The country no longer sells scarce dollars at subsidised rates, freeing exporters from the burden of an overvalued currency. This has made Nigeria’s economy more flexible and responsive to global shocks.
The shift to a market-driven exchange rate allows the naira to adjust naturally to fluctuations in oil prices and global economic changes — a major improvement from past practices that triggered crises.
These reforms, Kale noted, have also strengthened foreign reserves, which rose from $32.9 billion at the end of 2023 to over $42 billion by mid-2025 — the highest level in three years.
Naira gains ground as dollar weakens
The naira’s recent rally has coincided with a global decline in the U.S. dollar, which has lost value due to easing interest rates in the U.S. and rising investor appetite for emerging markets.
On Thursday, October 2, 2025, the naira traded at ₦1,455 per dollar in both official and parallel markets — a rare convergence that closed Nigeria’s long-standing exchange rate gap.
This appreciation, analysts say, reflects renewed confidence in Nigeria’s financial management.
Bala Moh’d Bello, a member of the Monetary Policy Committee (MPC), credited the naira’s stability to tighter liquidity, improved transparency, and investor confidence in ongoing reforms.
Nigeria’s reserves, now above $40 billion, are enough to cover more than nine months of imports, a strong signal of macroeconomic stability.
Boost for exports, relief for businesses
The stronger yet more competitive naira has made Nigerian products cheaper abroad, boosting non-oil exports and discouraging unnecessary imports.
Companies no longer depend on lobbying for dollar allocations and can instead focus on productivity and innovation.
As a result, non-oil exporters and manufacturing firms are recording stronger earnings, while Nigeria’s trade balance continues to improve — a clear indicator of reform dividends.
Source: Getty Images
Short-term pain, long-term gain
Despite the optimism, the reforms have come with pain. Inflation surged after the naira was floated, as the cost of imported goods and fuel rose.
Kale compared this phase to Egypt’s 2016 currency reforms, which initially spiked inflation above 30% but eventually restored growth through targeted subsidies and social safety nets.
For Nigeria, strengthening social protection systems will be vital to cushion the vulnerable while ensuring reforms achieve their full promise.
The road ahead: Sustaining the momentum
Analysts warn that sustaining the naira’s current strength will require patience and consistency.
While foreign portfolio inflows have stabilised the market in the short term, foreign direct investments (FDI), essential for job creation, will take longer to return.
Kale believes that as inflation eases, the Central Bank will gradually lower interest rates to encourage long-term investment.
“Reforms,” he said, “are not just policy changes but deliberate steps to secure a prosperous future.”
On Nigeria’s 65th Independence anniversary, the message is clear: with discipline and strategic execution, the naira’s rise could mark the rebirth of Nigeria’s economic promise.
Dollar crashes as experts warn naira may be overvalued
Legit.ng earlier reported that the naira has hit its strongest level in nearly 10 months, lifted by tighter monetary policy and rising foreign reserves.
However, a new report by investment bank Renaissance Capital (Rencap) has warned that the currency may now be overvalued by as much as 30%, posing a significant risk to Nigeria’s economic competitiveness.
According to Rencap’s findings, this overvaluation could cost Nigeria up to ₦6 trillion in lost competitiveness and higher import bills by 2026, a situation analysts say could hurt local manufacturing and exports.
Source: Legit.ng
