The Nigerian naira ended January 2026 on a firm footing, closing the official foreign exchange market at N1,386.55 per US dollar its strongest performance since May 2024 after appreciating N35.08, or 2.53%, from the previous week’s N1,421.63.
The currency opened the week at N1,418.95 per dollar and maintained steady gains, culminating in a 0.75% daily increase of N10.44 on Friday. In the parallel (black) market, the naira also strengthened, closing the week at N1,452 per dollar after gaining N18 during the period.
The rally is underpinned by a continued build-up in Nigeria’s external reserves, which stood at $46.17 billion as of late January. The higher reserves give the Central Bank of Nigeria (CBN) greater capacity to defend the currency and manage volatility.
A recent analysis by Quest Merchant Bank highlights that Nigeria’s forex market has entered a phase of relative stability in 2025 and early 2026, driven by structural reforms and improved transparency. The introduction of the Electronic Foreign Exchange Matching System has promoted a more open, rule-based market structure, narrowing pricing gaps between official and parallel segments and reducing speculative pressure.
The bank noted that average monthly FX inflows rose to $3.9 billion in 2025 from $2.6 billion in 2024, supported by renewed offshore investor confidence attracted by high domestic yields and the CBN’s tight monetary policy stance. Robust oil-related inflows and consistently strong diaspora remittances — averaging around $5 billion per quarter have further bolstered liquidity and kept exchange-rate fluctuations in check.
Quest Merchant Bank analysts expect the naira to maintain stability into 2026, albeit with occasional volatility. While oil continues to dominate external accounts (accounting for about 88% of merchandise FX earnings), a modest increase in crude production is anticipated. However, global oil prices remain uncertain due to potential supply growth from non-OPEC producers and softening demand.
Despite these risks, the overall outlook for FX liquidity appears positive, anchored by sustained portfolio inflows, reliable remittances, and disciplined CBN policy. The naira’s strong January close — the best official-market performance in nearly two years — signals growing confidence in Nigeria’s forex reforms and external buffers.
Market participants will watch closely for continued reserve growth and any shifts in global oil dynamics or investor sentiment. For importers, businesses, and households, the firmer naira offers welcome relief on import costs and helps moderate imported inflation as the new year progresses.
