Nigeria’s currency began 2026 with improved stability at the official window, supported by Central Bank reforms, stronger external reserves, and expectations of sustained FX inflows—though pressure persists in the parallel market
At the Nigerian Foreign Exchange Market (NFEM), the currency traded around ₦1,430–₦1,442 per dollar in the first trading sessions of the year, supported by improved liquidity, continued Central Bank interventions, and stronger external buffers. In intraday trading, the naira briefly firmed to about ₦1,427/$ before settling closer to ₦1,440/$.
By contrast, the parallel market continues to trade at a premium. Bureau de Change operators in Lagos, Abuja and Kano quoted the dollar between ₦1,455 and ₦1,465, reflecting persistent retail demand and limited access to FX outside the official window.
Early-Year Pressures Return
Market participants say the mild pressure on the naira reflects seasonal dynamics rather than a structural deterioration. Following the festive slowdown, manufacturers and importers have returned to the market to rebuild inventories for the first quarter, lifting dollar demand.
Investors are also watching Nigeria’s external reserves and any signs of renewed liquidity injections by the Central Bank of Nigeria to narrow the spread between official and informal markets.
2025 Stability Carries Into 2026
Data from the CBN show that the naira closed 2025 with markedly lower volatility than the year before. While the average exchange rate in 2025 was slightly weaker than in 2024, price swings narrowed significantly, reflecting better FX supply and improved market transparency.
Analysts attribute this to reforms such as the Electronic Foreign Exchange Matching System and the FX Code, which tightened price discovery and curtailed speculative trading. External reserves also rose to about $45bn by the end of 2025, providing a buffer against shocks despite heavy FX interventions and debt-service obligations earlier in the year.
Analyst Outlook: Broad Stability Expected
Research houses broadly expect the naira to trade within a relatively contained range in 2026, provided policy consistency is maintained.
Meristem Securities projects the official exchange rate will trade between ₦1,350/$ and ₦1,528/$ this year, supported by sustained foreign inflows, planned foreign-currency issuances by the Federal Government, and stronger non-oil export receipts.
According to the firm, while oil revenues may remain soft, inflows from gas exports, portfolio investments and improved capital importation should help preserve FX liquidity and support continued CBN intervention capacity.
Coronation Research holds a similar view, forecasting a ₦1,400–₦1,500/$ trading band in 2026. Its analysts cite higher oil production, reduced dependence on imported refined fuel, and better FX liquidity from exports as key stabilising factors, while warning that gains depend on fiscal discipline and sustained investor confidence.
At AIICO Capital, strategists also expect the naira to trade around current levels in the absence of a major supply shock, noting that volatility has become more contained compared with earlier reform phases.
CBN Signals Policy Continuity
In its policy outlook, the CBN said it would continue to balance price stability with output growth in 2026, deploying appropriate tools to attract foreign investment and consolidate gains in the FX market. Recent moves to strengthen oversight of Bureau de Change operators are also expected to help limit excessive volatility in the parallel market.
What to Watch in 2026
For the months ahead, analysts say the key variables will include oil and gas export performance, capital inflows amid shifting global interest-rate expectations, and the authorities’ ability to maintain reform momentum.
For now, the naira’s opening performance suggests a cautious but improved start to 2026—one shaped less by crisis management and more by consolidation after a turbulent adjustment period.
