EUR/NGN Outlook: Slightly positive, but likely to move sideways, as the rate is near its recent average and lacks a clear directional driver.
Key drivers:
• Rate gap: The European Central Bank's focus on a stable monetary policy contrasts with Nigeria's proactive interventions to support the naira, creating a cautious balance.
• Risk/commodities: Oil prices have recently reached highs, which can support the naira given Nigeria's status as an oil exporter, yet volatility in oil markets can create uncertainty for the currency.
• One macro factor: The Central Bank of Nigeria aims for inflation moderation, projected to average around 13% in 2026, which could positively influence the naira's strength if achieved.
Range: The EUR/NGN is likely to drift within its recent 4.4% range as neither currency shows significant strength or weakness currently.
What could change it:
• Upside risk: A stronger-than-expected recovery in the Eurozone could boost the euro and push rates higher.
• Downside risk: A sharp decline in oil prices could negatively impact the naira, creating pressure on the EUR/NGN exchange rate.
