Why the Naira Is Gaining Strength: Understanding the Link Between Bitcoin and Nigeria’s Currency Recovery
The Nigerian Naira is showing signs of recovery after years of volatility, with the currency trading around N1,340 per US dollar on the parallel market, up from lows beyond N1,600 earlier this year. Vice President Kashim Shettima recently noted that the naira “would have appreciated to N1,000 per dollar in weeks” if not for Central Bank of Nigeria (CBN) interventions, signaling a shift from free-fall to a more stable trajectory. This rebound reflects a combination of disciplined monetary policy, strategic fiscal reforms, and the resilience of Nigerian entrepreneurship.
Two major reforms spearheaded by President Bola Tinubu’s administration have laid the foundation for this stability. First, the FX market unification and float in June 2023 allowed the naira to find its market-driven level, reducing arbitrage and attracting portfolio flows. Second, the removal of the petrol subsidy in May 2023 saved the government over N1 trillion in just two months, freeing revenue for productive sectors. While both moves caused short-term pain—raising consumer costs—they strengthened the currency’s credibility and gave the CBN room to act predictably.
The CBN’s role has been pivotal in consolidating gains. By maintaining a tight monetary stance, clearing FX backlogs, and allowing licensed Bureau De Change operators access to foreign currency, the central bank has created a predictable environment that restored investor confidence. Gross reserves have climbed above $50 billion USD, the highest in 13 years, while headline inflation has eased slowly to 15.10% in January 2026. Yet, fiscal dominance—when government spending and borrowing override monetary policy—remains a concern, potentially undermining long-term stability if not managed carefully.
Entrepreneurship has also played a key role in supporting the naira. Aliko Dangote’s refinery has reduced fuel imports, saved foreign currency, and created by-products that fuel other sectors like plastics, aviation, and construction. The refinery’s output underpins optimism for a sustainable naira recovery, showing that private-sector innovation can complement government reforms. However, challenges remain, including heavy borrowing, inefficient sub-national spending, and the need for trade facilitation to enable businesses to thrive.
Finally, global and technological trends are influencing currency dynamics. An inverse relationship between Bitcoin demand and naira strength shows that households often turn to crypto as a hedge when the currency weakens; calmer Bitcoin inflows have coincided with the naira’s recent rise. Regional policies, like invoicing petrol in naira across ECOWAS, could further deepen demand. To make appreciation meaningful for Nigerians, governments must combine fiscal discipline, inclusive spending, export protection, and infrastructure investment to ensure the benefits of a stronger naira reach households, not just market statistics.
source: nairametrics