Recently, key economic data have revealed stronger foreign exchange (FX) inflows, tighter Central Bank controls, cooling inflation, and a shift in investor positioning, all of which are reinforcing the naira’s recent gains, although oil revenue and global risk remain key threats.
Analysts are beginning to say that the naira’s recent strength is starting to look less like a temporary rebound and more like a liquidity-driven trend.
Reuters reported on 19 February that traders expected the naira to strengthen further in the week ahead, supported by stronger foreign exchange inflows and Central Bank dollar sales to bureau de change operators.
Reuters also noted the move has helped narrow the spread between official and parallel market rates, with the naira quoted at 1,344 per dollar in the official market and 1,385 in street trading on that day.
The Key Driver is Supply
On 11 February, the Central Bank of Nigeria approved weekly foreign currency sales of up to $150,000 to each licensed BDC operator through authorised dealer banks. The regulator also tightened compliance, including KYC checks, electronic reporting, and a rule requiring unused foreign exchange to be returned to the market within 24 hours. Those steps improve retail market liquidity and reduce speculative hoarding.
A Second Support is Nigeria’s External Buffer
Check by Pinnacle Daily indicates that Nigeria’s external reserves rose above $48.5 billion, a level it said was helping liquidity and narrowing the gap between official and parallel market rates. Rising reserves do not remove pressure entirely, but they improve the Central Bank’s room to manage volatility and steady expectations.
Inflation trends also matter, and the latest numbers support the naira story.
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Headline inflation eased to 15.10 per cent in January from 15.15 per cent in December, marking the tenth straight monthly decline.
Food inflation also slowed to 8.89 per cent from 10.84 per cent. Lower inflation eases panic demand for dollars and strengthens confidence in monetary management, even as the National Bureau of Statistics’ updated methodology changes the measurement base.
There is Also a Behavioural Shift in the Market
Pinnacle Daily had earlier reported that investors who held dollars as a hedge against devaluation are reassessing that position as naira gains continue and liquidity improves. a treasury manager said, “We’re seeing those that have large savings in dollars beginning to offload them.” That kind of repositioning often adds momentum to an FX move because a fresh dollar supply returns to the market.
The Medium-Term Policy Backdrop Adds Another Layer of Support
In December, the Central Bank’s 2026 outlook projects stronger external buffers, with reserves seen rising to $51.04 billion and a current account surplus of $18.81 billion, supported by stronger oil and non-oil exports plus remittances.
The same report cited the bank’s view that growth prospects are supported by reforms and “improved stability in the exchange rate.”
However, the bullish case is not risk-free.
Nigeria’s FX outlook remains sensitive to oil receipts, foreign portfolio flows, and broader global risk sentiment. External vulnerabilities still linger in the Central Bank’s outlook. A sharp external shock, weaker crude earnings, or a sudden change in investor appetite would slow the rally.
For now, though, the balance of evidence points in one direction. Better liquidity, firmer reserves, cooling inflation, and reduced speculative dollar demand are giving the naira a stronger base, and that is why its gains are likely to keep gathering pace in the near term.
Statements That Cannot Be Ignored
Since the turn of the year, there have been bullish comments by foremost nigerian industralist and Africa’s richest man, Aliko Dangote, Chairman of the Dangote Group, who on 18 Feb. said, “The currency this year will be as low as N1,100 if we are lucky.” He linked this view to import substitution and industrial policy reforms.
Dangote’s comment came days after Femi Otedola, Chairman, First HoldCo, who on 12 Feb., said, “I am optimistic that the naira will strengthen meaningfully.”
He tied this to reduced FX pressure from domestic refining at Dangote Refinery.
only two days earlier, Nigeria’s Central Bank Governor, Olayemi Cardoso, was quoted as saying, “We are now net buyers.” this was part of his remarks on stronger reserves and improved FX market conditions.
He further said: “The premium between the official and parallel market rates has collapsed to under two per cent.” This supports the argument that FX market distortions are easing.
“Now the naira is more competitive, and people are not afraid to hold naira.” He added.
Sunday Michael Ogwu is a Nigerian journalist and editor of Pinnacle Daily. He is known for his work in business and economic reporting. He has held editorial roles in prominent Nigerian media outlets, where he has focused on economic policy, financial markets, and developmental issues affecting Nigeria and Africa more broadly.
