Naira Posts Strong Comeback, Breaking Two‑Year High Against Dollar

Naira Posts Strong Comeback, Breaking Two‑Year High Against Dollar

The Nigerian naira has staged a remarkable comeback against the U.S. dollar, defying expectations and posting sustained appreciation across foreign exchange markets as economic conditions improve, external reserves strengthen, and central bank interventions take effect. This upward momentum reflects a significant shift in Nigeria’s currency dynamics, offering potential relief for businesses, investors, and everyday consumers.

In the official foreign exchange market, the naira has recently strengthened to around ₦1,358 per dollar, its strongest level in nearly two years, fuelled by growing foreign exchange liquidity, rising external reserves, and improved investor confidence. At the close of 2025, the naira finished the year with a gain of over ₦100 per dollar, narrowing the gap between official and parallel markets and underscoring its resilience and renewed stability. The country’s external reserves expanded to approximately $45.5 billion, giving policymakers more buffer to support the currency and dampen volatility.

This performance marks a notable shift from previous periods of sharp depreciation, when the naira traded well above ₦1,600 per dollar in official and parallel markets. In contrast, recent data shows continued strengthening, with parallel market rates also improving, trading below ₦1,500 per dollar at various points as foreign exchange supply conditions eased and market distortions reduced.

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Analysts attribute the rebound to aggressive interventions by the Central Bank of Nigeria (CBN), including increased foreign exchange injections into the market — approaching $800 million in December alone — and renewed sales of dollars to Bureau de Change operators. These liquidity measures helped to boost market confidence and narrow the gap between official and street exchange rates, supporting the naira’s appreciation trend as the new year begins.

Economic forecasts suggest that if current policies and external inflows persist, the naira could continue to outperform projections, with some analysts forecasting it might trade around ₦1,350 per dollar by the end of 2026, a level that would signal sustained recovery momentum for the local currency.

The strengthened naira has also had real‑world impacts on prices, with consumers and traders noting sharper pricing for imported goods like smartphones and other electronics, reflecting less exchange rate pressure on retail costs. This relief in price pressures has contributed positively to market sentiment and consumer confidence.

Despite this progress, currency watchers caution that sustaining the gains will require continued economic reforms, stable inflows from oil and non‑oil sectors, prudent monetary policy, and consistent support for domestic production to reduce reliance on imports. The recent performance, however, is being seen as a turning point — a sign that coordinated policy actions and strengthening macroeconomic fundamentals can deliver tangible gains in exchange rate stability.

As Nigeria navigates the complexities of global financial conditions, the naira’s recent outperformance of the dollar stands out as one of the most notable developments in the country’s economic narrative, offering optimism for continued stability in the foreign exchange landscape.

Naira Posts Strong Comeback, Breaking Two‑Year High Against Dollar