The EUR to NGN exchange rate has recently faced downward pressure due to a combination of factors affecting both the Euro and the Nigerian Naira. Analysts observed that the euro's decline is closely tied to its negative correlation with a strengthening US dollar, particularly evident in recent sessions. Latest data from the Eurozone, including a revision of the final services PMI, indicates that activity is stagnating, failing to provide significant support for the euro. With forecasts for declines in German factory orders and Eurozone PPI, further pressure on the EUR can be anticipated unless countered by hawkish comments from the European Central Bank's President Christine Lagarde.
Inflation remains a critical issue for the Eurozone, exerting influence over the ECB’s monetary policy. Speculation surrounding a potential pause in interest rate hikes reflects growing concerns about economic growth in the region, contributing to market uncertainty. Additionally, geopolitical tensions, especially arising from the ongoing conflict in Ukraine and fluctuations in energy prices, are diminishing investor confidence in the euro. This turmoil has been further exacerbated by expectations of overall economic slowdown in the Eurozone.
In Nigeria, the Naira has shown some resilience amid ongoing economic reforms and heightened foreign investor interest. The Central Bank of Nigeria's recent actions, including a crackdown on 'money spraying' practices and requests for external borrowing, aim to bolster the currency's stability. However, inflation rates exceeding 23% challenge recovery efforts, affecting purchasing power and economic stability. Despite these hurdles, the Naira has appreciated over 7% against the US dollar since late 2024, supported by high local bond yields.
The exchange rate data indicates that the EUR to NGN currently trades at 1806, slightly above its three-month average of 1796, having experienced volatility within a 10.0% range from 1679 to 1847. Given that oil prices significantly influence the Nigerian economy, the recent trend of oil averaging above 68.80, which is 3.2% above its three-month average, could lead to fluctuating impacts on the Naira. As energy prices remain volatile and intertwined with geopolitical developments, currency analysts suggest closely monitoring these factors, as they could shift trade dynamics between the Euro and the Naira and ultimately affect transaction costs for individuals and businesses engaged in international exchanges.