The war between the United States and Iran began in late February, triggering a conflict that quickly rattled global energy and financial markets as well as the closure of the Strait of Hormuz – the world’s most important oil chokepoint. Nigeria, like many other countries not involved in the conflict, was still affected, with the impact initially showing up as a shift in foreign portfolio investment sentiment and pressure building on the naira.
The real question is how Nigeria’s currency fluctuations will affect businesses in the long term and what it would take for the country to emerge stronger from any potential shocks in the future. In the early days of the war, the Central Bank of Nigeria (CBN) reacted quickly to mitigate the effects on the foreign exchange market. Within 48 hours, it injected $200 million to defend the naira, followed by a further $1.1 billion in reserves in the weeks that followed.
These measures helped the naira remain largely stable through the worst of the volatility and were especially effective given that Nigeria had already been rebuilding its economic credibility for about 18 months before the war erupted. The CBN had cleared a verified $7 billion FX backlog that had previously paralysed manufacturing and trade for years and raised interest rates to bring inflation under control. Over the same period, portfolio inflows also began to return, and reserves climbed to a 17-year high, giving the CBN room to respond from a position of strength rather than scarcity. Even as the naira weakened, Nigerian stocks did the opposite, with the benchmark index crossing 200,000 points for the first time in its history, a sign that equity investors were betting on Nigeria’s longer-term story.
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A test Nigeria was already prepared for
In the same window, Nigeria’s position as Africa’s largest oil producer meant that, in relative terms, the country was in a strong medium-term position to benefit from higher global oil prices during periods of geopolitical disruption. For example, in the early days of the conflict, Brent crude jumped by $14 per barrel, a move that would boost Nigeria’s export revenues. This was further boosted by Dangote’s refinery hitting a new record of 700,000 barrels per day, establishing the country as a stabilising force for fuel security in the region.
However, this upside has not reached everyone equally; the trickle-down costs for businesses and households have been real. Fuel prices rose more than 50 percent, feeding directly into transport, food, and production costs. For businesses, currency volatility added another layer of complexity, affecting different sectors in varying degrees. During the early weeks of the war, sectors like manufacturing and construction, which are typically locked into long-cycle, naira-denominated contracts, absorbed the sharpest pain, as a sharp move in the exchange rate eroded margins on projects agreed months earlier at a different rate. By contrast, fast-moving consumer goods businesses, with much shorter invoicing cycles, could reprice closer to real time and feel the shock far less.
While there’s no way of ensuring businesses can protect themselves completely from external forces, especially when it comes to FX, an area where volatility is expected from time to time, operators can leverage innovative fintech solutions to mitigate some of those risks and protect their profit margins. For example, fintechs like Verto help businesses not only access cheaper FX but also lock a rate and fund within 24 hours. Meaning, whilst the merchant may not have received the value yet, once they are aware how much is coming, that risk can be immediately hedged, removing that exposure without losing out on good deals. Other services like multi-currency accounts also give businesses more control over how much they decide to keep in local vs international currencies during times of volatility. Ultimately, the businesses that will be better prepared for external shocks are those that have the tools to move quickly when the exchange rate shifts and markets are fast-moving.
What comes next
Looking at the second half of 2026, we must learn the lesson from the Iran war: currency shocks of this kind are now a recurring feature of a more volatile global economy. The countries that come through them best will be the ones whose institutions and businesses are positioned to absorb the next shock with the least possible disruption to their economic foundation. Nigeria has reserves at a 17-year high, a reform programme that has held under genuine pressure, and a market that came back stronger than it went in. The task now is to extend it down to the level of the businesses still exposed so that the next global shock finds an even more resilient economy.
Ola Oyetayo, Co-Founder and CEO, Verto.
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