MARKET NEWS

The NGN is undoubtably on a tear, it has seen more appreciation in its value in the first few weeks of 2026 than it did in the entirety of 2025! If this winning streak continues, then the value could reach levels not seen since the current government came to power in no time.

Nigerians like their NGN strong and stable. And their heart desires might soon come true. Projections have been made about the promising prospects of the Nigerian currency, the Naira. Those in the know, inclusive of the incumbent President, Bola Tinubu; as well as the man on whose back these projections are predicated, Aliko Dangote; and the Nigerian billionaire, Femi Otedola; have all told Nigerians that the NGN would appreciate in value to a region around N1000 to the USD from N1300 – N1400 at the moment. The President expects it to be N1000 to the USD within weeks; Dangote was modest in saying N1100 to the USD; while Otedola’s optimism placed it at below N1000 before the year ends.

The Steep Appreciation of the NGN is Attributable to Many According to the President, there has been so much USD liquidity now that the Central Bank of Nigeria (CBN) has had to mop up excess of it from the market in a bid to ensure stability. Because if it is not done, the NGN would have attained N1000 to the USD in a matter of weeks instead of months. The Foreign Exchange (FX) reserves have reached 13-year highs at $50.45 billion. This demonstrates so much firepower for the CBN to support the NGN. Furthermore, its inspires confidence in the Nigerian economy. Deep-rooted structural distortions in the market such as the ones in the foreign exchange market, refined fuel subsidy and energy subsidy have all been largely tamed, if not completely eliminated. For the Chairman of the FirstHoldCo, NGN might even be below N1000 to the USD by the end of the year. And this is predicated on the success of the Dangote Petrochemical Refinery (DPR). DPR has reduced Nigeria’s import bill hence pressure on the NGN by making a dent on the importation of refined fuel, which has been Nigeria’s main import but is slowly be reduced because of domestic production.

Nigeria’s Catch-22 as a Result of NGN Appreciation

A strong NGN as a result of steeply appreciation means imports become more affordable and hence prices falling as well as low inflation rate. This means increase in purchasing power.

On the other hand, a steeply appreciating Naira means Nigerian exports to the world become less competitive hence less USD inflows and less ability of the CBN to defend the international value of the NGN. And the less the FX inflows from exports, the more the pressure on the NGN. Even the recent trade surplus would be eliminated with even the possibility of trade deficits if the naira steeply appreciates in value. Quick appreciation as seen in January and first half of February, also means monetary tightening by other means consequently risking economic growth. And a risk to economic growth jeopardises Nigeria’s dream of a $1 trillion nominal Gross Domestic Product (GDP) by 2030.

What Would Stimulate a Stronger NGN?

Improved macroeconomic fundamentals and a supportive exchange rate environment with more FX liquidity and less structural rigidities:

Stronger oil earnings with higher output and/or higher prices would make the NGN stronger. Oil receipts from selling more oil or at a higher price would definitely be a boon to the value of the NGN in terms of the USD.

Foreign Portfolio Investments into Nigeria’s fixed income and equity market would mean higher USD liquidity and hence higher NGN value.

More remittances into Nigeria boosts the value of the NGN. So, the more dollar inflows as a result of remittances from Nigerians living abroad, the more the chances of the naira appreciating in value.

CBN’s USD intervention in the market would most especially in the parallel market would help make the NGN strong. Instead of leaving the naira to its own devices, the CBN needs to intervene from time to time to support the naira.

Bigger FX reserves would mean the better ability of the CBN to defend the NGN and inspire confidence in the Nigerian economy. The CBN is projecting a 15 year high from a 13 year high. Reduce import needs with Dangote Petrochemical Refinery (DPR) doubling its capacity to be the largest refinery in the world as well as other refineries coming on stream.

Conclusion

While Nigeria’s appreciate an NGN that is on a par with the USD, and for good reasons too, it enhances their purchasing power. It is not however without its own downsides. It makes Nigerian exports less competitive and kills domestic production. This is a catch-22 situation for Nigeria. Hence the CBN mopping up excess USD so as not to create instability as a result of steeply appreciating NGN.