The naira experienced a mild depreciation at Nigeria’s official foreign exchange (FX) market in the second week of January 2026, closing at N1,421 per dollar on Wednesday, according to data released on the Central Bank of Nigeria (CBN) website.
This movement follows a slight weakening earlier in the week, with the currency trading at N1,428/$ on Monday and N1,416/$ on Tuesday, marking Wednesday’s close as the first notable mid-week slip.
Analysts, however, note that the fluctuation remains within a narrow band, suggesting moderated volatility compared to previous years.
At the parallel or “black” market, the naira weakened further, averaging N1,490–N1,495 per dollar on Wednesday, up from N1,470/$ the previous day.
The persistent gap between official and informal rates reflects ongoing unmet demand for foreign currency, particularly for travel allowances, imports, and other invisible transactions.
Nigeria’s foreign exchange reserves rose slightly to $45.62 billion on Tuesday, up from $45.60 billion on Monday, offering additional support to the naira.
The CBN has projected reserves to reach $51.04 billion in 2026, compared with an estimated $45.01 billion in 2025, driven by higher oil earnings, sovereign bond issuances, diaspora remittances, and easing FX pressures.
Experts say the rising reserves, alongside ongoing FX reforms, underpin confidence in the naira. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), described the 2026 outlook as largely positive.
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“The prospects for the stability of the naira are quite bright. This is largely because our foreign reserves are very strong, and reserves play a critical role in determining the strength and stability of any currency,” he said.
Analysts also point to domestic refining developments as a structural support for the currency. The Dangote Refinery expanded its capacity to 700,000 barrels per day from 650,000 barrels per day in 2025, with a medium-term target of 1.4 million barrels per day.
This expansion is expected to reduce Nigeria’s dependence on refined fuel imports, bolster reserve accumulation, and reinforce FX market stability.
In its 2026 macroeconomic outlook, CardinalStone projected that the naira could strengthen to a range of N1,350–N1,450 per dollar, highlighting the potential for medium- to long-term appreciation despite short-term fluctuations.
Market watchers also note that the early-year FX movements, including a previous weakening to N1,431/$ on January 2, 2026, reflect post-holiday FX demand and adjustments in supply rather than structural instability.
Economists are optimistic that with rising reserves, ongoing FX reforms, and structural improvements in oil refining, the naira is positioned for relative stability and gradual strengthening throughout 2026.