The naira strengthened to its best level in six months, driven by high interest rates, stronger revenues, and dollar weakness.
The Nigerian naira extended its rally on Monday, September 16, hitting ₦1,497 per dollar, its strongest level since March and more than 11% below its 2025 peak.
The gains mirror the performance of the Kenyan shilling, both driven by favorable economic and policy shifts.
Analysts attribute the naira’s rebound to elevated interest rates, with the Central Bank of Nigeria holding its benchmark at 27.5%, above the 20% inflation rate. This has pushed bond yields higher, with 10-year paper at 16.6% and two-year at 15%, making Nigeria attractive for carry trade investors. “These yields are much higher than what similar bonds are offering in the United States,” one analyst noted.
Additional tailwinds include a 40% jump in non-oil revenues to ₦20.5 trillion, stronger crude output, and the launch of the Dangote refinery, which reduces demand for imported petroleum.
Weakness in the U.S. dollar, pressured by expectations of Federal Reserve rate cuts, has also boosted emerging market currencies.
Looking ahead, traders expect further gains, with the naira possibly testing ₦1,476 per dollar.