Market News

The naira on Friday depreciated across both the official and parallel foreign exchange markets, ending the week with losses of N17.07 as liquidity management actions by the Central Bank of Nigeria (CBN) moderated recent gains.

Data published by the CBN showed that the local currency weakened by 1.25 percent week-on-week, with the dollar quoted at N1,363.39 on Friday compared to N1,346.32 on Friday last week at the Nigerian Foreign Exchange Market (NFEM).

Over the five trading sessions, the naira dropped by 1.04 percent from N1,349.24 recorded on Monday, the first trading day of the week. On a day-on-day basis, the currency fell by 0.3 percent, or N3.57, compared to N1,359.82 quoted on Thursday at the NFEM.

In the parallel market, commonly referred to as the black market, the naira recorded weekly losses of N30 to close at N1,370 on Friday, representing a 2.19 percent decline from N1,340 quoted the previous Friday. However, daily, the currency held steady at N1,370.

The exchange-rate gap between the official and parallel markets narrowed further to N7 from N11 on Thursday, reflecting a 0.5 percent closure and signaling greater convergence between the two segments.

Before last week’s pullback, the naira had recorded a sustained rally against the dollar, reaching a two-year high of N1,335.96 on February 17, 2026, at the NFEM, according to CBN data. The recent cooling followed a strong appreciation streak that saw the CBN step into the market to mop up excess dollar liquidity, moderating the pace of gains and preventing an overly rapid strengthening of the currency.

Analysts at CardinalStone noted that the naira had appreciated steeply in recent weeks, gaining about 6.9 per cent year-to-date as of last week in the official market and reaching one of its strongest levels in two years. Despite the rally, the parallel market had traded at roughly a 5.7 percent premium to the official rate before narrowing to around 3.2 percent following renewed dollar sales to bureau de change operators.

Tunde Lemo, former deputy governor of the Central Bank, said the recent stability of the naira and steady growth in Nigeria’s external reserves are sustainable. He attributed the improvements to structural reforms, better trade dynamics, and disciplined monetary management.

The CBN recently disclosed that the country’s gross external reserves rose to $50.45 billion, reinforcing confidence in Nigeria’s foreign-exchange position and signalling stronger liquidity conditions.

Olayemi Cardoso, governor of the CBN, made this known at the end of the 304th Monetary Policy Committee meeting in Abuja. He said the current reserve level is sufficient to provide about 9.68 months of import cover, underscoring the country’s improved buffer against external shocks.

Cardoso attributed the reserve accretion to higher export earnings and increased remittance inflows, which have supported foreign-exchange liquidity and renewed investor confidence.

In its macroeconomic outlook for the first half of 2026, analysts at Comercio Partners said the year 2025 marked a turning point for the naira, representing its first annual appreciation in 13 years. The currency strengthened by approximately 6.87 percent against the dollar, moving from about N1,541 at the start of the year in the official market to close at around N1,435 on December 31, 2025. Similar gains were recorded in the parallel market, significantly narrowing premiums and improving alignment across market segments.

The improved performance reversed a prolonged cycle of depreciation driven by structural imbalances. Instead, 2025 delivered greater stability amid enhanced foreign-exchange liquidity, rising external reserves (up over 11 per cent), and renewed investor confidence.

Several deliberate policy measures underpinned this turnaround. Building on exchange-rate unification and liberalisation reforms initiated between 2023 and 2024, the CBN deepened market-driven mechanisms throughout 2025. A key milestone came on January 28, when the apex bank formally launched the Nigerian Foreign Exchange Code, aligning market conduct with global best practices to promote transparency, accountability, and ethical standards among banks and dealers, while reducing opportunities for manipulation and strengthening trust in the system.

Complementing this initiative, the CBN also implemented the Electronic Foreign Exchange Matching System, an automated order-matching platform approved for interbank trading and fully operational from late 2024 into 2025, further enhancing transparency and efficiency in the FX market.