Improved reserves, CBN policies keep Naira steady below N1,400/$

The Nigerian naira has maintained relative stability in 2026 after experiencing significant volatility between 2024 and early 2025, with analysts projecting the local currency to remain largely steady for the rest of the year amid stronger foreign exchange reserves, tight monetary policy and ongoing reforms by the Central Bank of Nigeria (CBN).

The naira, which has recovered considerably from the sharp depreciation recorded in 2024, is currently trading below the N1,400 per US dollar threshold, with the official spot exchange rate hovering around N1,370/$.

Market analysts and financial institutions, including the Chartered Institute of Stockbrokers and CFG Advisory, expect the currency to trade within a relatively stable range of between N1,350/$ and N1,520/$ through the remainder of 2026.

According to the projections, the naira is likely to remain within the N1,350/$ to N1,500/$ band for most of the year, although sustained improvements in foreign reserves and continued foreign exchange reforms could support further appreciation. However, analysts caution that external economic developments remain a potential source of volatility.

One of the key factors supporting the naira is Nigeria’s improved external reserves, which have risen from approximately $45.5 billion in 2025 to about $51 billion in 2026.

The stronger reserve position has significantly enhanced the CBN’s capacity to intervene in the foreign exchange market and defend the local currency against speculative attacks.

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The apex bank’s tight monetary policy has also contributed to improved market confidence.

With the Monetary Policy Rate (MPR) currently standing at 26.67 per cent, the CBN has maintained a restrictive policy stance aimed at containing inflation and supporting exchange rate stability.

Although the elevated interest rate environment has slowed domestic credit expansion for businesses, it has also attracted increased foreign portfolio investment into Nigeria’s fixed-income market as investors seek higher yields.

While analysts note that household purchasing power remains under pressure, they say declining inflation, favourable base effects and improved exchange rate stability have helped reduce cost-push inflation across several sectors of the economy.

Nigeria’s broader economic outlook has also shown signs of improvement, with Gross Domestic Product (GDP) growth projected to recover to between 4.0 per cent and 4.4 per cent, supported largely by increased crude oil production.

Average oil output has risen to approximately 1.48 million barrels per day, providing additional support for government revenues and external earnings.

Despite the positive outlook, analysts warn that the naira’s long-term stability will depend largely on maintaining consistent crude oil production rather than relying solely on international oil prices.

Although Brent crude continues to trade around $70 per barrel, they note that much of Nigeria’s previous oil production had already been committed through forward sales, limiting immediate gains from higher production volumes.

Economists also believe Nigeria could attract additional foreign capital as advanced economies gradually ease interest rates, making frontier markets implementing structural reforms more attractive to international investors.

Meanwhile, developments in the global financial markets continue to influence exchange rate expectations.

The US Dollar Index, which measures the strength of the dollar against a basket of six major currencies, strengthened during Monday’s Asian trading session, hovering around the 101.00 level despite easing global inflationary pressures.

The dollar’s resilience has been supported by market expectations regarding future monetary policy decisions by the Federal Reserve System.