Nigeria’s currency has begun the new year on a firmer footing, offering early signs of calm after a bruising period of volatility. On the first trading day of 2026, the naira appreciated to N1,430.84 per dollar at the official market, according to data from the Central Bank of Nigeria (CBN), extending the relative stability it built toward the end of 2025.
The opening performance capped a steady week in which the naira largely traded around the N1,440/$ level, supported by improved foreign exchange supply, targeted CBN interventions and stronger external reserves. Over the past week, the currency gained N12.53 against the dollar—an 86-basis-point improvement—trading within a band of N1,427.00 to N1,445.68 and posting gains in most trading sessions.
From Wild Swings to Measured Moves
Market analysts say the most notable shift is not just the exchange rate level, but the sharp drop in volatility. While the average naira rate in 2025 was slightly weaker than in 2024, price swings narrowed dramatically. According to Meristem Securities, exchange-rate volatility eased to 0.53 per cent in 2025 from 4.58 per cent a year earlier, reflecting deeper FX liquidity and stronger external buffers.
The naira last traded below the N1,430/$ mark in late October 2025, a period many analysts now view as a turning point. Since then, reforms led by the CBN—including the launch of the Electronic Foreign Exchange Matching System and the introduction of a formal FX Code—have improved transparency, enhanced price discovery and reduced speculative pressure in the market.
Reserves Provide a Safety Net
Backing the currency’s steadier performance is a stronger reserve position. Nigeria’s external reserves climbed more than 10 per cent in 2025, rising to about $45.2 billion from roughly $40.9 billion at the end of 2024. Although debt servicing and FX interventions weighed on reserves in the first half of the year, inflows rebounded later, supported by higher trade receipts, stronger capital importation and proceeds from Eurobond issuances.
This reserve build-up has given the CBN greater room to smooth market imbalances and support liquidity when needed.
What to Expect in 2026
Looking ahead, analysts expect the naira to remain broadly stable this year, albeit within a wide trading range. Meristem projects the official exchange rate to move between N1,350/$ and N1,528.57/$ in 2026, citing sustained foreign inflows, resilient reserves and planned foreign-currency borrowings by the Federal Government.
While oil revenues may stay under pressure, inflows from gas, non-oil exports and foreign portfolio investment are expected to help offset the gap. Analysts also point to a potentially softer monetary stance in advanced economies, which could redirect capital toward emerging markets like Nigeria.
In the parallel market, stability is also expected to improve as ongoing FX reforms take hold. The recent issuance of new Bureau de Change licences is seen as strengthening oversight of informal trading and limiting excessive speculation.
A Cautious but Promising Start
As 2026 gets underway, the naira’s calmer debut suggests that last year’s reforms are beginning to pay off. Whether the currency can hold its ground will depend on sustained inflows, disciplined policy execution and the CBN’s ability to preserve liquidity. For now, the naira has opened the year with a sense of balance—and a welcome break from the chaos of the past.
