Naira Begins 2026 On A Stronger Note At 1,430.84 To the Dollar

Over the past week, the naira traded around the N1,440 per dollar level at the official market, maintaining relative stability supported by improved foreign exchange supply, Central Bank interventions, and the cushioning effect of Nigeria’s external reserves. Within the week, the currency appreciated by N12.53 per dollar, representing an 86 basis point gain week-on-week. It moved within a band of N1,427.00 to N1,445.68 per dollar, recording gains in three out of four trading sessions.

Analysts noted that the exchange rate has remained broadly stable when compared with the sharp volatility experienced in the previous year. Meristem Securities observed that although the average exchange rate in 2025 stood at N1,519.63 per dollar, slightly weaker than N1,486.03 per dollar in 2024, volatility eased markedly to 0.53 per cent from 4.58 per cent. This trend was attributed to improved FX liquidity and stronger external buffers.

At the official Nigerian Foreign Exchange Market, the naira last traded below the N1,430 per dollar mark on 31 October 2025, when it closed at N1,421.73 per dollar. Analysts attributed the recent stability largely to reforms driven by the Central Bank, including the introduction of the Electronic Foreign Exchange Matching System in December 2024 and the FX Code, both of which enhanced market transparency, improved pricing efficiency, and reduced speculative activity.

Nigeria’s external reserves also recorded strong growth in 2025, rising by 10.60 per cent year-to-date to $45.21 billion from $40.9 billion at the end of 2024. Although reserve accumulation was initially weighed down by foreign debt servicing and FX market interventions in the first half of the year, it recovered in the second half on the back of stronger FX inflows from higher trade receipts, increased capital importation, and Eurobond proceeds.

Looking ahead, analysts at Meristem projected that the naira would trade within a range of N1,350.00 to N1,528.57 per dollar in 2026. They noted that the official exchange rate is expected to remain largely stable, supported by sustained foreign inflows and a resilient external reserve position. Planned foreign currency-denominated issuances by the Federal Government, as outlined in the Medium-Term Expenditure Framework, are also expected to boost reserves. While oil revenues may remain subdued, inflows from gas and non-oil exports are expected to support reserve levels. In addition, strong foreign portfolio investment inflows, driven by rising investor confidence and potential capital shifts from developed markets, should further strengthen FX liquidity.

According to the analysts, these factors should preserve the Central Bank’s capacity to intervene in the FX market and sustain adequate liquidity, thereby supporting naira stability. They added that the parallel market is also expected to remain relatively stable in 2026, reflecting the impact of ongoing FX reforms aimed at improving transparency and curbing speculative activity. The recent issuance of Bureau de Change licences was cited as a further step in strengthening regulatory oversight of the informal market and limiting excessive volatility.

Coronation Research shared a similar outlook, projecting that the naira would trade within the N1,400 to N1,500 per dollar range in 2026. The firm attributed this outlook to higher oil production, reduced reliance on imported refined fuel, and improved FX liquidity from stronger export earnings. It cautioned, however, that sustained stability would depend on consistent policy implementation, enhanced investor confidence, fiscal discipline, and continued improvements in capital inflows through a transparent, market-driven FX framework.

AIICO Capital also echoed these views in its weekly report, noting that, in the absence of any major shift in FX supply, the naira is expected to trade around current levels.

In its outlook for 2026, the Central Bank reaffirmed its commitment to balancing price stability with support for economic growth, stating that appropriate policy tools would be deployed to attract foreign investment and consolidate stability in the foreign exchange market.