Currency before the naira
Nigeria's modern currency history begins with a colonial ordinance of 1880 that made shillings and pence the legal tender of British West Africa, replacing the cowries, manillas and other commodity monies that had circulated across the region S1. From 1912 the West African Currency Board issued a common pound-shillings-pence currency across Nigeria, Ghana, Sierra Leone and the Gambia, with the pound as the highest denomination S1. The Central Bank of Nigeria (CBN), established in 1958 and operational from 1 July 1959, took over currency issuance from the Currency Board and began withdrawing the old West African notes S1. It redesigned the currency again in 1962 to reflect the country's new republican status, changing the wording from "Federation of Nigeria" to "Federal Republic of Nigeria," and issued a further redesign in 1968 as the civil war raised concerns about the misuse of banknotes on both sides of the conflict S1
The 1973 decimalisation
Nigeria's currency changed fundamentally on 1 January 1973, when the naira and kobo replaced the Nigerian pound, shillings and pence under a decimalisation plan that had been under study since the early 1960s S1S2. The conversion set one naira equal to ten shillings, so that one pound became two naira, with the kobo introduced as the minor unit at 100 kobo to the naira S1. The first naira notes issued were the ₦10, ₦5, ₦1 and 50 kobo denominations, alongside seven coin values, and the larger pre-1973 pound notes were fully withdrawn from circulation by 1977 S2. The change coincided with a period of high global oil prices, and for the rest of the 1970s the naira traded close to parity with, or stronger than, the US dollar S6
Devaluations and exchange-rate regimes, 1986–2016
That relative strength ended with the mid-1980s debt and oil-price crisis. Under General Ibrahim Babangida's military government, the CBN introduced the Second-tier Foreign Exchange Market (SFEM) in late September 1986 as part of an IMF-linked Structural Adjustment Programme, allowing the naira's rate against the dollar to be set largely by market forces rather than an administrative peg S4. The Guardian Nigeria's own retrospective on the period describes the naira as having been devalued by roughly 500% almost overnight once SFEM took effect, moving it from a fixed rate of about ₦0.9–2.0 to the dollar toward levels several multiples higher S4S6. The CBN's own historical exchange-rate data show the naira depreciating steadily through the 1990s and 2000s across successive market-determined windows — the Autonomous Foreign Exchange Market, the Interbank Foreign Exchange Market and, later, the Bureaux de Change segment — even as the government periodically tried to hold or manage official rates S3. A second major rupture came on 20 June 2016, when Governor Godwin Emefiele's CBN abandoned a 16-month-old peg of roughly ₦197–199 to the dollar in favour of a "flexible interbank" system, citing collapsing oil earnings and depleted external reserves, which had fallen from $42.8 billion in January 2014 to $26.7 billion by June 2016 S5. The naira opened trading under the new regime near ₦280–288 to the dollar, an immediate depreciation of roughly 30% S5S6. By 2020 the official rate had been adjusted downward twice more, and by the CBN's own published data the naira's various market rates had depreciated a further 41.5% between 2016 and 2020 alone S3
Note redesigns from the 1970s to the 2000s
Beyond exchange-rate policy, the CBN has periodically redesigned the physical currency to combat counterfeiting, reflect new political milestones, or mark national anniversaries. The ₦20 note introduced on 11 February 1977 was the first Nigerian banknote to carry the portrait of a named citizen, General Murtala Ramat Muhammed, who had been assassinated the previous year S1. New ₦1, ₦5 and ₦10 notes followed on 2 July 1979, banknote colours were changed in April 1984 to frustrate currency traffickers, and the 50 kobo and ₦1 notes were converted to coins in 1991 S1. Higher-value ₦100, ₦200, ₦500 and ₦1,000 notes were phased in between December 1999 and October 2005 as inflation eroded the purchasing power of the original decimal-era denominations, and the CBN began a gradual shift to polymer substrate starting with the ₦20 note on 28 February 2007, extending to lower denominations by 30 September 2009 S1
The 2022–2023 redesign and cash crunch
The most disruptive redesign in the naira's history began in late 2022. The CBN, again under Governor Emefiele, announced new designs for the ₦200, ₦500 and ₦1,000 notes, released to the public from 15 December 2022, initially requiring the older notes to cease being legal tender by 31 January 2023 S1S7. The policy produced a severe nationwide cash shortage as the pace of new-note distribution lagged the withdrawal of old notes, and sixteen state governors challenged it in court S7. On 3 March 2023 the Supreme Court ruled that the redesign as implemented had violated the 1999 Constitution and ordered old notes to remain legal tender alongside the new ones until 31 December 2023 S7. As that later deadline approached, the federal government under President Bola Tinubu sought a further extension, and on 29 November 2023 the Supreme Court ruled that old and redesigned notes would continue to co-exist as legal tender "until further notice," removing any fixed cut-off date entirely, an episode covered in institutional detail in central bank of nigeria S7
FX unification and the naira today
President Tinubu's government also moved on exchange-rate policy within weeks of taking office. On 14 June 2023 the CBN directed banks to stop capping the naira's rate on the official Investors' and Exporters' window, collapsing the country's multiple exchange-rate windows into a single, market-determined system intended to close the gap between an official rate then near ₦462 to the dollar and a parallel-market rate as high as ₦755 S6. The naira depreciated sharply after unification and continued weakening through 2024 before stabilising and appreciating over 2025–2026 amid tighter monetary policy, with the CBN's own published central rate reaching ₦1,361.59 to the US dollar on 24 July 2026, against a buying rate of ₦1,361.09 and a selling rate of ₦1,362.09 S8. Current and historical rate movements are tracked day to day in the companion explainer naira exchange rate, while the naira's fortunes over the past half-century remain closely tied to swings in oil gas industry earnings, which supply the bulk of Nigeria's foreign exchange S8