The naira recorded its first annual appreciation in 13 years, buoyed by sweeping foreign exchange reforms from the Central Bank of Nigeria that helped stabilise the currency and narrow the gap between official and parallel market rates, according to a new report by investment firm Comercio Partners.
In its economic outlook titled Policy Shock to Structural Reset: Charting a Sustainable Economic Path, the firm said the naira strengthened by about 6.87 per cent against the United States dollar in 2025, reversing more than a decade of chronic depreciation driven by structural weaknesses and policy distortions.
The currency opened the year at roughly N1,541 to the dollar in the official market and closed around N1,435, a performance Comercio attributes to deliberate CBN actions aimed at deepening market transparency and liquidity.
Key among these was the launch of the Nigerian Foreign Exchange Code, which adapts global best practices to local conditions, and the introduction of an Electronic Foreign Exchange Matching System to improve price discovery and reduce opportunities for manipulation in interbank trading.
These measures, the report noted, helped rebuild confidence, boosted foreign-exchange liquidity and supported an 11 per cent rise in external reserves, providing a stronger buffer against external shocks. Capital inflows surged to nearly $21bn in the first ten months of 2025, a 70 per cent jump from the previous year, driven by higher remittances, portfolio investments and oil-related earnings, while growing domestic refining capacity eased import pressures.
Comercio Partners said the reforms also reshaped Nigeria’s inflation dynamics. A rebasing of the Consumer Price Index by the National Bureau of Statistics reset the inflation series, cutting headline inflation on the new base to 24.48 per cent from 34.8 per cent on the old methodology, and reducing apparent volatility, particularly in food prices.
With FX market unification and improved liquidity curbing speculative attacks on the naira, imported inflation moderated, limiting the frequency of price adjustments across the economy.
Looking ahead, the firm projects headline inflation in the first half of 2026 to remain on a disinflationary path, with a base-case forecast of 14 to 16 per cent, assuming policy continuity, gradual monetary easing and a broadly stable FX market. It warns, however, that policy slippage or renewed FX stress could push inflation back into the 18 to 22 per cent range.
Despite a more optimistic macroeconomic backdrop and expectations of GDP growth of 4.0 to 4.5 per cent in the pre-election year, Comercio cautions that Nigeria’s high debt service burden, estimated at about 45 per cent of projected 2026 revenues, remains a major constraint on fiscal space and long-term development.
