The naira showed resilience in the final week of January 2026, gaining significant ground against the United States dollar in the official Nigerian foreign exchange market.
According to data from the Central Bank of Nigeria, the Nigerian foreign exchange market rate, which is the official rate used for corporate international payments and eligible transactions such as medical needs and school fees, strengthened from a weekly high of 1,422.07/$ on the previous Friday, 23 January, to close the month at 1,386.55/$ last Friday. This indicates a 2.47 per cent appreciation.
The naira recorded a consistent upward trend starting from 26 January, moving from 1,418.95 per dollar to its strongest point of 1,386.55 per dollar by Friday. Although the market saw a highest rate of 1,423.50/$ early in the week, the gap between the highest and lowest daily rates narrowed towards the end of the month, indicating a period of relative stability.
The strengthening of the official Nigerian foreign exchange market rate is a critical indicator for the economy, as it often dictates the pricing for imported goods and services processed through the banking system.
Analysts suggest that if this trend continues, it could help to dampen inflationary pressures on imported commodities.
Analysts at Cowry Assets Management Limited, in their weekly report, acknowledged the strengthening of the naira against the dollar over the past week and noted that in the parallel market, the local currency also performed positively, appreciating 2.11 per cent to N1,444.19/$
Sharing their outlook for the week, the analysts said, “The naira is expected to maintain moderate gains, supported by steady oil receipts, stronger non-oil inflows, and a trade surplus. Oil prices are likely to remain stable to mildly bullish, reflecting steady global demand and the unchanged interest rates from the United States Federal Reserve.”
According to CardinalStone, the naira traded at N1,465.00 per dollar in the parallel market.
The experts at AIICO Capital said that in January, the naira reported appreciation in the parallel market as it rose by 1.28 per cent from N1,490.00/$ to close at N1,460.00/$.
Highlighting the drivers of the month’s trend, the analysts said, “Stability prevailed throughout the month, with modest naira appreciation driven by improved FX liquidity from foreign portfolio investors, local market participants and minimal CBN intervention. Meanwhile, the external reserve rose by $687.40 m month-on-month to $46.18 bn, driven by improved FX inflows, oil receipts, remittances, and sustained stabilisation measures.”
In its outlook, the projection is that the naira will “remain volatile but broadly stable, with modest appreciation in February. Robust external reserves and expectations of sustained high crude oil prices should provide support alongside ongoing monetary and fiscal reforms aimed at boosting foreign inflows. Downside risks from external shocks are expected to remain limited in the near term.”
Meanwhile, Bloomberg reports that concerns about the new tax laws are driving United States dollar demand in the parallel market, with a bureau de change operator, Abubakar Muhammed, telling the news outlet, “Individuals are converting naira to dollars to secure their assets or to avert scrutiny from tax agents. We may see the dollar demand start to wane and the rate appreciate gradually when there is more clarity around the tax.”
Confirming the development, the Chief Executive Officer of Financial Derivatives Company, Bismarck Rewane, said, “People are afraid that tax authorities could actually lock their accounts. In the interim, what they are doing is they are just buying United States dollars and keeping them aside.”
