Naira stabilizes as confidence in Tinubu’s reforms grows – Bloomberg

Nigeria’s currency, the naira, appears to be decoupling from global oil prices which is the country’s main source of foreign exchange earnings.

Despite volatility in the first half of the year, the naira stabilised even as international oil prices continued to decline, a shift analysts say reflects broader economic dynamics.

Analysts from Deutsche Bank AG and Cardinal Stone project the naira will close the year near N1,556 to the dollar, its average rate in the first six months of 2025, after slumping 41 percent in 2024.

The currency traded around N1,530 on Tuesday, relatively flat for the year.

Chief Investment Officer at Emerging Markets Investment Management Ltd., London, Ayo Salami, attributed the naira’s performance to its undervaluation, higher non-oil exports, and reduced import demand.

“The currency is trading below its fair value based on purchasing power parity,” he said.

Businesses are expected to benefit from the currency’s steadiness following steep losses in 2023 and 2024 when the Central Bank of Nigeria allowed the naira to trade more freely.

The local currency’s stability has also been aided by a weakening US dollar, which is down over 10 percent this year, and reduced dependence on imported refined petroleum products.

A Bloomberg index tracking local bond performance reached an all-time high, returning 19 percent this year, marking its strongest half-year performance since December 2020.

”Nigeria’s stocks have also gained 18 percent, while the emerging-market local debt gauge is up 12 percent.“

Head of Africa Strategy at Standard Chartered, Samir Gadio. “The NGN has become more correlated with global risk conditions.”

“Risk conditions have since improved materially; this has supported renewed portfolio flows into Nigeria debt even with oil prices currently below $70 per barrel.” He noted.

The Global Economic Policy Initiative, in a statement signed by Bernard Okri, welcomed the development describing it as a testament to the President Tinubu administration’s economic reforms, driven by Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy.

“We welcome Bloomberg’s latest report as a testament to the growing investor confidence in President Bola Tinubu’s economic reforms, driven by Wale Edun and his team.

“The naira’s stabilisation—despite subdued global oil prices—signals that our economy is gradually decoupling from overreliance on hydrocarbons, a shift long overdue.

“This resilience is being powered by deliberate macroeconomic adjustments, including the liberalisation of the foreign exchange market, reduced subsidy burdens, disciplined fiscal management, and policies that have begun to unlock growth in non-oil sectors and attract long-term capital.”

The group noted that it was encouraged by the renewed portfolio inflows, strong bond and equity market performance, and rising non-oil exports, which together affirm the positive trajectory of Mr. Wale Edun’s economic strategy.

It stated that “While challenges remain, Mr Edun’s focus has been to consolidate these gains, maintain exchange rate stability, and deepen reforms that improve productivity, reduce inflation, and create jobs.

“The Wale Edun led economic team has shown resolute commitment to building a resilient, diversified, and inclusive economy that can deliver shared prosperity for all Nigerians.”