The naira is maintaining a relatively firm position against the euro as increased foreign-exchange liquidity and recent policy measures by the Central Bank of Nigeria (CBN) continue to support stability in the official market.
Latest CBN data showed that the naira closed last week at N1,576 per euro, compared with N1,573/€1 in the preceding week.
Despite the marginal weekly depreciation, the naira remains significantly stronger than it was at the beginning of the year. The euro traded around N1,774/€1 in January 2026 before retreating to a multi-month low of about N1,555/€1.
The EUR/NGN exchange rate has also remained unusually stable in recent weeks, trading within a narrow band of approximately N1,561/€1 to N1,576.7/€1 since the opening days of July.
Market analysts attribute the reduced volatility partly to the CBN's sustained intervention and liquidity injections into the foreign-exchange market.
The interventions have helped to limit sharp movements in the official exchange rate at a time when global currency markets remain sensitive to interest-rate expectations, geopolitical tensions and movements in commodity prices.
CBN reforms reshape forex market
The relative stability of the naira comes as the CBN continues to introduce structural, regulatory and monetary policy measures aimed at improving foreign-exchange market liquidity and reducing volatility.
One of the recent changes was the increase in upfront payments for imports of physical goods from 15 percent to 30 percent of Free on Board (FOB) value.
The adjustment is expected to simplify import transactions and reduce working-capital pressures for businesses that rely on foreign suppliers.
The apex bank also eased some requirements for self-funded domiciliary account holders. Under the revised arrangement, such customers no longer need to complete “Form A” for the affected transactions, allowing balances from self-funded accounts to be domiciled directly into their intended destinations.
The CBN has also implemented higher Personal and Educational Allowances, including provisions of up to $25,000 per semester for international school fees.
Under the revised foreign-exchange arrangement, PTA/BTA is paid 25 percent in physical foreign-exchange cash and 75 percent electronically.
The reforms are expected to make access to foreign currency more predictable for households and businesses while reducing some of the administrative bottlenecks that previously characterized the market.
Interest-rate differential supports naira
Nigeria's relatively high domestic interest rates have also remained an important factor supporting the naira in the short term.
Expectations of monetary easing by the European Central Bank have limited broad-based strength in the euro, leaving the currency vulnerable against some emerging-market currencies where domestic yields remain comparatively attractive.
For Nigeria, high interest rates have helped improve the appeal of naira-denominated assets, even though the economy continues to face elevated inflation.
While high rates come with significant borrowing costs for businesses and consumers, they have also provided some support for the currency by helping to attract and retain portfolio flows and reducing incentives for aggressive positioning against the naira.
The combination of monetary policy, CBN intervention and improved forex liquidity has therefore contributed to the relatively calm conditions observed in the official market.
Euro struggles to gain ground against dollar
In the international market, the euro started the new week on a subdued note, trading below $1.1600 against the US dollar during early European trading on Monday.
The euro remained close to recent highs following weaker-than-expected US employment data, which has increased expectations that the Federal Reserve may have less room to maintain an aggressive interest-rate stance.
The latest US Nonfarm Payrolls report showed that payrolls contracted by 23,000 jobs in July, significantly missing the consensus forecast of an 80,000-job increase.
The previous month's figure was also revised sharply lower to 20,000 jobs from an initial estimate of 57,000.
Meanwhile, annual wage inflation, measured by Average Hourly Earnings, eased to 3.2 percent from 3.4 percent, while the unemployment rate declined to 4.1 percent from 4.2 percent.
The combination of weaker job creation and slower wage growth has weakened the case for additional US Federal Reserve rate hikes and could eventually weigh on the dollar if expectations for monetary easing become stronger.
Hormuz tensions complicate currency outlook
However, geopolitical risks have continued to provide a counterweight to the dollar's potential weakness.
The Strait of Hormuz remains a major concern for global investors because of its strategic importance to international energy supplies. Any prolonged disruption to shipping through the waterway could push crude oil prices higher and reignite inflationary pressures.
Such developments typically increase demand for safe-haven assets, particularly the US dollar.
Currency traders have therefore remained reluctant to take aggressive directional positions while awaiting further developments in the Middle East.
Iran said over the weekend that talks with Oman were approaching an agreement aimed at creating a safe shipping route through the Strait of Hormuz. Tehran, however, warned that any agreement would not automatically lead to the immediate reopening of the waterway.
Separately, the Iran-backed Houthi group in Yemen said a recent missile strike targeted Saudi Arabia's Jazan refinery. A tanker flagged from the UAE's Abu Dhabi National Oil Company was also reportedly hit in the Strait of Hormuz.
The developments have kept a geopolitical risk premium in global markets, supporting oil prices and safe-haven demand while adding uncertainty to the inflation and interest-rate outlook.
US CPI data to determine next direction
Investors are now turning their attention to US Consumer Price Index data due this week for fresh clues on the Federal Reserve's next policy move.
The inflation figures will be closely watched after the weaker employment report, as traders assess whether the deterioration in the US labour market is strong enough to encourage the Fed to consider a less restrictive monetary policy.
For the EUR/USD pair, the direction of the US dollar, oil prices and developments around the Strait of Hormuz are likely to remain important near-term drivers.
In Nigeria, attention will remain on CBN intervention, foreign-exchange liquidity and interest-rate conditions as traders assess whether the naira can sustain its recent stability.
For now, the narrow EUR/NGN trading range points to a relatively orderly official market. However, underlying inflationary pressures, global monetary-policy shifts and geopolitical risks mean that the currency outlook remains sensitive to changes in both domestic and international conditions.