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The naira has maintained relative stability in the foreign exchange (FX) market as remittance inflows through international money transfer operators

The naira has maintained relative stability in the foreign exchange (FX) market as remittance inflows through international money transfer operators (IMTOs) reached a seven-year first-half (H1) high of $2.85 billion as of June 2026, according to data from the Central Bank of Nigeria (CBN).

Data from the CBN showed that the naira gained 7.29 percent year-to-date, with the dollar quoted at N1,333.65 on Tuesday at the Nigerian Foreign Exchange Market (NFEM), compared with N1,430.85 at the beginning of January 2026.

On a day-on-day basis, the naira closed broadly flat at N1,333.65/$ on Tuesday, compared with N1,333.72/$ on Monday at the NFEM.

In the parallel market, also known as the black market, the local currency appreciated to N1,372 per dollar on Wednesday, gaining 8.53 per cent year-to-date from N1,500/$ traded at the beginning of the year. On a daily basis, the naira traded broadly flat at N1,372/, compared to N1,373/$ on Tuesday.

The currency’s performance coincided with stronger formal remittance inflows and an increase in Nigeria’s external reserves, which have provided a stronger buffer against foreign exchange pressures.

Remittance inflows rise 38.16% in six months …

The CBN’s data on international money transfer operator inflows showed that Nigeria received $2.85 billion between January and June 2026, up 38.16 percent from the $2.07 billion recorded in the corresponding period of 2025.

The increase represents approximately $788.5 million in additional inflows and marks the highest first-half total in the seven-year period covered by the available data.

The performance also reverses the 11.78 per cent decline recorded in the first half of 2025, when inflows fell from $2.34 billion in January–June 2024 to $2.07 billion.

A monthly breakdown showed that June recorded the highest inflow in the first half of 2026, at $580.16 million, followed by April at $513.81 million and January at $507.91 million.

Inflows totalled approximately $1.29 billion in the first quarter, while the second quarter generated about $1.57 billion, accounting for roughly 55 percent of the six-month total.

External reserves climb to 18-year high …

Nigeria’s external reserves, which provide the CBN with a buffer for meeting external obligations and managing foreign exchange pressures, have also strengthened.

Data published on the CBN website showed that external reserves rose to $55.12 billion as of October 19, 2026, their highest level in 18 years.

The figure represented a 28.69 per cent increase from the $42.83 billion recorded on October 20, 2025.

The stronger reserve position could support confidence in Nigeria’s ability to meet foreign currency obligations and provide a buffer against external shocks. Nevertheless, reserve accumulation alone does not guarantee exchange-rate stability, which also depends on foreign exchange demand, capital flows, oil receipts and monetary policy.

The combination of stronger reserves and rising formal remittance inflows points to an improvement in Nigeria’s external position, although the sustainability of the gains will depend on continued inflows and the management of competing foreign exchange demands.

Foreign exchange market activity presents mixed picture …

Activity in the foreign exchange market showed different trends across trading segments on Tuesday.

Total turnover at the interbank segment of the foreign exchange market rose by 49.59 per cent to $60.72 million from $40.59 million on Monday. The number of deals also increased by 18.64 per cent, from 59 to 70.

At the NFEM window, the number of deals rose by 2.17 per cent, from 230 on Monday to 235 on Tuesday. However, total NFEM turnover declined by 2.75 per cent to $322.21 million from $331.31 million recorded in the previous session.

The mixed turnover figures suggest that the naira’s relative stability has not been accompanied by uniform increases in market activity. Changes in transaction volumes can reflect shifts in the timing and size of foreign exchange demand and supply, making it important to distinguish currency stability from market liquidity.

Cardoso links currency stability to long-term naira lending …

CBN Governor Olayemi Cardoso has argued that sustained exchange-rate stability could help deepen Nigeria’s capital markets by reducing currency risks for investors, lenders and businesses.

“The prospects for mobilising long-term naira-denominated capital have increased significantly as a result of the stability we have achieved in the markets,” Cardoso said.

He added that “the risks previously associated with exchange-rate volatility and sharp currency depreciation have receded considerably.”

A more predictable currency environment could make it easier for

 banks and other financial institutions to offer longer-tenor naira loans and financing arrangements.

Cardoso also noted that greater stability could encourage investment and support the development of financial products designed around a more predictable macroeconomic environment.

“When stability returns and foreign exchange becomes less of a constraint, it becomes easier to develop financial products and investment structures that support long-term financing,” he said.

For banks, development finance institutions and investors, the potential benefit lies in greater predictability when assessing borrowers’ cash flows, funding costs and repayment capacity. However, exchange-rate stability is only one factor in lending decisions; interest rates, inflation, credit risk and borrowers’ financial positions remain important.

Sustaining gains remains the challenge …

The latest figures point to stronger formal remittance inflows, higher external reserves and a naira trading at a stronger level than at the beginning of 2026.

However, the remittance figures cover January–June, while the exchange-rate and reserve figures relate to October.

The key challenge for policymakers will be to sustain formal remittance growth and reserve accumulation alongside adequate foreign exchange liquidity, reduced market distortions and continued confidence in monetary policy.

For Nigeria’s banking industry, sustained currency stability could create better conditions for long-term naira-denominated lending and investment. For the wider

 economy, the challenge is to translate improved external buffers and foreign exchange conditions into more predictable financing, productive investment and durable economic growth.