Naira Appreciates Further as Nigeria's External Reserves Reach Highest Level in Eight Years
The Nigerian naira has continued its positive trajectory against the United States dollar, strengthening significantly in both the official and parallel foreign exchange markets. This sustained appreciation comes as Nigeria's external reserves have climbed to their highest level since August 2018, signaling improved economic fundamentals and enhanced investor confidence in Africa's largest economy.
Official and Parallel Market Performance
According to data released by the Central Bank of Nigeria (CBN), the naira traded at N1,351.02 per US dollar in the Nigerian Foreign Exchange Market (NFEM) on Tuesday, February 10, 2026. This represents a notable 0.2% gain compared to the previous day's rate of N1,354.26. The currency's appreciation reflects consistent positive momentum in the official trading window.
In the parallel market, the naira demonstrated even stronger performance, gaining N5 against the dollar to close at N1,440 per dollar. This improvement from the previous day's rate of N1,445 indicates broad-based strengthening across different segments of the foreign exchange market.
External Reserves Surge to $47.02 Billion
The naira's robust performance coincides with Nigeria's external reserves reaching $47.02 billion as of February 6, 2026. This marks the highest level since August 2, 2018, when reserves stood at $47.06 billion. The significant accumulation of foreign reserves provides crucial support for currency stability and enhances Nigeria's capacity to meet international obligations.
Looking ahead, the Central Bank of Nigeria's 2026 macroeconomic outlook projects even more substantial growth, with external reserves potentially rising to $51.04 billion this year. This optimistic forecast is based on several factors including higher oil earnings, ongoing foreign-exchange market reforms, and continued inflows from external sources.
Analysts Attribute Gains to CBN Reforms and Improved Liquidity
Financial analysts at Quest Merchant Bank have identified multiple factors driving the naira's appreciation. They point to the Central Bank's consistent reform agenda and stronger foreign exchange liquidity as primary catalysts for the currency's positive momentum. The analysts noted that in January, the naira had already strengthened to N1,391 per dollar from N1,429 in December, supported by portfolio inflows and elevated global oil prices.
"We expect the naira to remain broadly stable and trade within a narrow band, supported by sustained FX liquidity," the Quest analysts stated. "Stronger offshore inflows, higher FX receipts from oil, and a still-attractive carry trade environment are expected to reinforce stability."
CBN Authorizes Dollar Sales to Bureau De Change Operators
In a significant policy development, the Central Bank of Nigeria has approved weekly foreign currency sales of up to $150,000 to each licensed bureau de change (BDC) operator. This strategic move aims to improve liquidity in the retail segment of the currency market and address the persistent gap between official and parallel market rates.
Aminu Gwadabe, President of the Association of Bureau De Change Operators of Nigeria (ABCON), welcomed the CBN's decision, emphasizing its potential impact on market stability. "The new decision will no doubt positively impact the stability of our local currency," Gwadabe told journalists. "It will also help address the persistent and wide gap between the NFEM rate and the unregulated market."
Gwadabe further explained that the directive would increase dollar liquidity at the critical retail end of the market while providing a reliable source of dollars to operators. He emphasized that this development would foster positive market sentiment and boost investor confidence in Nigeria's financial sector.
Compliance and Market Transparency
The ABCON president called on bureau de change operators to ensure strict compliance with prudential requirements and anti-money laundering obligations. "Above all, it will promote transparency, accountability, and effective price discovery in the foreign exchange market," Gwadabe stated, highlighting the importance of regulatory adherence in maintaining market integrity.
Gwadabe acknowledged that BDCs have historically proven to be effective tools in the Central Bank's foreign exchange market transmission mechanism. He expressed delight at the positive development and congratulated all successful BDCs nationwide on this regulatory advancement.
The combined effect of rising external reserves, improved foreign exchange liquidity, and strategic policy interventions by the Central Bank of Nigeria has created favorable conditions for the naira's continued appreciation. Market observers will be watching closely to see if this positive trend can be sustained throughout 2026 as Nigeria's economic reforms continue to take effect.
