Naira Strengthens to N1,396.99 as Analysts Explain Currency Rally Amid Dollar Decline
The Nigerian naira has achieved a significant milestone, appreciating to its strongest level in two years against the US dollar. This development marks a positive turn for the nation's economy as it continues on its path to recovery.
Official and Parallel Market Performance
Data released by the Central Bank of Nigeria reveals that the naira strengthened to N1,396.99 per dollar in the official foreign exchange market on Thursday, January 29, 2026. This represents a substantial gain of N264.13, or 18.91%, compared to the rate of N1,616.12 recorded in December 2024.
On a day-to-day basis, the currency rose by N3.49, equivalent to 0.25%, from Wednesday's rate of N1,400.48. Intraday trading saw bids ranging between N1,367 and N1,385 per dollar, indicating robust market activity.
In the parallel market, traders reported similar improvements. Abdullahhi, a currency trader, noted that the dollar was sold at N1,470 on Thursday and Friday morning, down from previous rates of N1,485 to N1,490. This translates to a gain of N70 for the naira, representing a 4.76% increase from December 2024 levels.
Expert Analysis on the Naira's Appreciation
Financial experts have identified multiple factors driving the naira's recent rally. A primary contributor is the weakened position of the US dollar, which has fallen to its lowest level in four years. This decline followed former President Donald Trump's downplaying of concerns about the currency's slide, prompting investors to shift toward safe-haven assets such as gold and the Swiss franc.
Charlie Robertson, author of The Time Travelling Economist, commented on this trend, stating, "A weak dollar is dislocating many markets, but it is good for Africa, as we are seeing with the naira."
Manpreet Gil, Chief Investment Officer for Africa, Middle East, and Asia at Standard Chartered, highlighted how the weaker dollar creates favorable conditions for capital inflows into emerging and frontier markets. This environment strengthens both equity and bond markets across Africa, benefiting currencies like the naira.
Supporting Factors for Currency Strength
Beyond global currency trends, several domestic factors are bolstering the naira's performance:
- Stable oil production combined with rising global oil prices
- Increased remittances from Nigerians abroad
- Proceeds from Eurobond issuances
- Improved foreign exchange governance and policy implementation
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, emphasized that the currency's strength signals growing confidence in Nigeria's ongoing economic reforms. He stated, "As long as the reforms continue and we avoid major shocks, especially from oil, the outlook remains sustainable."
Foreign Exchange Reserves Reach Eight-Year High
Supporting the naira's appreciation is a significant increase in Nigeria's external reserves. Data shows that gross external reserves rose to $46.11 billion as of January 28, 2026, representing a $5.82 billion increase (14.45%) from $40.29 billion in December 2024.
This level marks the highest reserve accumulation in eight years, with the last comparable figure recorded in August 2018. The strengthened reserves provide crucial external buffers for the Nigerian economy and contribute to renewed optimism about the naira's stability.
The combination of favorable global currency dynamics, improved domestic economic indicators, and strengthened foreign exchange reserves creates a promising outlook for Nigeria's currency as it continues to appreciate against the dollar.
