The Central Bank of Nigeria’s recent foreign exchange reforms are strengthening confidence in the naira and opening new opportunities for trade with China. Analysts say the reforms, which calmed volatility in the FX market, have made the yuan-naira exchange more attractive, reducing the heavy reliance on the U.S. dollar in cross-border transactions. Chinese traders are increasingly accepting naira for their currency, a shift experts attribute to the improved stability of Nigeria’s local currency.
According to Jimi Ogbobine, Head of Agusto Consulting, the reforms helped the naira move from instability into a predictable trading band, which is exactly what investors have been seeking. “Markets don’t necessarily want a strong naira, they want a stable one,” he explained. This stability has encouraged foreign partners, especially China, to transact directly with the naira, even though it remains a soft currency not traded internationally.
Economist Dr. Ayo Teriba, however, noted that the naira’s performance against the U.S. dollar remains the ultimate benchmark. He highlighted that global factors, including former U.S. President Donald Trump’s tariff policies, continue to influence Nigeria’s currency stability. While the naira has hovered around ₦1,500 per dollar in recent months, Teriba stressed that a further strengthening to ₦1,400 or below would be a milestone worth celebrating.
Market analysts point to growing optimism around the naira, with FXTM’s Lukman Otunuga describing it as one of the best-performing African currencies at the start of September. The renewal of Nigeria’s $2bn currency swap deal with China in late 2024 has also given yuan-naira transactions more credibility. Alongside improved revenue from the non-oil sector, rising capital inflows, and CBN interventions, the naira is gaining renewed investor trust, with Nigeria’s GDP projected to grow 3.6% in Q2 2025.
Backing these reforms, Budget Office DG Tanimu Yakubu argued that allowing the naira to find its true value has transformed it from a “symbol of weakness” into a driver of competitiveness. Non-oil exports surged nearly 20% year-on-year to $3.225bn in H1 2025, proving Nigerian goods have become more attractive abroad. With stronger remittances, cleared FX backlogs, and growing export earnings, analysts say Nigeria may finally be entering a “sweet spot” where stability and competitiveness work hand in hand to support the local currency.
Source: Punch