• Nigerian naira posts first annual gain since 2012, up 7.4%
• Recovery driven by FX reforms, tighter policy, narrowed rate gap
• Analysts warn durability hinges on inflation control, sustained inflows

The Nigerian naira ended 2025 on a positive note, posting its first annual gain in more than a decade. The currency closed at 1,429 per dollar on Dec. 31, up 7.4% over the year, according to official Central Bank of Nigeria (CBN) data.

It was the naira’s first yearly appreciation since 2012, following thirteen consecutive years of depreciation driven by chronic foreign exchange shortages, heavy import dependence and persistent market imbalances.

The recovery was far from smooth. After a turbulent first half marked by high inflation, strong foreign exchange demand and delayed capital inflows, the naira fell to a low of around 1,602 per dollar in April.

A gradual rebound began in May and accelerated in the final quarter. September marked a turning point, with the currency settling back below the 1,500-per-dollar threshold. After a brief consolidation in November, the naira strengthened further in December to end the year at its highest level in twelve months.

Analysts attribute the turnaround to foreign exchange market reforms launched by the Central Bank in 2024 under Governor Yemi Cardoso. The measures narrowed the gap between official and parallel market rates to less than 5%, curbing speculation and improving price transparency.

The Central Bank also tightened monetary policy and strengthened oversight, introducing a foreign exchange conduct code in early 2025 to guide market participants’ behavior.

While the stabilization has raised cautious optimism for 2026, analysts warn the naira’s durability will depend on Nigeria’s ability to rein in inflation, attract capital on a sustained basis and diversify its foreign exchange sources.

The CBN expects price pressures to ease sharply, projecting average inflation of 12.94% in 2026, down from about 21.3% in 2025, supported by moderating food and fuel prices, greater exchange rate stability and the impact of ongoing monetary and structural reforms.

Economic growth is also expected to accelerate, with gross domestic product forecast to expand by about 4.49% in 2026. The outlook, however, hinges on continued reform momentum, stronger foreign exchange inflows and a more stable macroeconomic environment. Without lasting progress, analysts caution the currency could remain vulnerable to renewed volatility.

Fiacre E. Kakpo