Naira Experiences Six-Day Decline as Central Bank Intervenes in Forex Market
The Nigerian naira has recorded a slight depreciation after several weeks of significant gains in the foreign exchange market, marking a shift in momentum as of Wednesday, February 25, 2026. Official data reveals that the naira closed at ₦1,356.11 per U.S. dollar, a decrease of approximately 74 kobo from the previous day's rate of ₦1,355.37. This represents the sixth consecutive trading session where the currency has lost ground, following a period of robust appreciation.
Central Bank's Strategic Dollar Purchases to Moderate Naira's Rise
The Central Bank of Nigeria (CBN) has actively intervened by purchasing U.S. dollars from the market, a move aimed at slowing the local currency's rapid appreciation. This intervention is somewhat unusual in recent months and is designed to prevent the naira from strengthening too quickly, which could destabilize other segments of the financial system. Officials and analysts express concerns that a swift rise in the naira might prompt foreign investors to sell Nigerian fixed-income assets, increasing demand for dollars and pressuring reserves. By absorbing excess dollars, the CBN seeks to moderate the pace of appreciation and maintain orderly trading conditions.
Reports indicate that last week, the central bank purchased around $190 million in foreign currency to reduce excess supply and calibrate the naira's rise. This strategy has helped narrow the exchange-rate gap between the official and parallel markets, contributing to more stable trading environments.
Market Reactions and Implications for Traders and Corporations
Despite the cooling of the naira's firming trend, market reactions show cautious optimism. Many traders and corporations are rethinking their foreign exchange strategies as confidence in the local currency returns. The stronger naira had previously led some firms to offload dollar holdings and increase their exposure to naira, reflecting growing optimism about the currency's outlook. However, this optimism is tempered by caution, as a sudden reversal in investor sentiment or a sharp drop in foreign exchange inflows could quickly renew pressure on the naira. The CBN's interventions thus represent a balancing act, supporting stability without stifling potential gains.
Impact on Everyday Nigerians and Economic Stability
For everyday Nigerians, movements in the foreign exchange market can influence various aspects of daily life, including prices of imported goods, travel costs, and overall inflation rates. A stronger naira generally eases the cost of imported products, while volatility can lead to higher prices and uncertainty for businesses and consumers. By acting decisively to slow the naira's rally, the CBN appears to prioritize market stability over short-term gains. However, with global economic factors and local reforms still unfolding, the currency's trajectory in the coming months is likely to remain a closely watched economic indicator in Nigeria.
President Tinubu's Projection on Naira's Future Strength
In related developments, President Bola Tinubu has projected that the naira could strengthen to ₦1,000 against the U.S. dollar within weeks. Speaking at the Renewed Hope Ambassadors Summit in Abuja on Tuesday, February 25, 2026, Tinubu, represented by Vice President Kashim Shettima, cited ongoing reforms and recent interventions by the CBN to stabilize the foreign exchange market as reasons for this optimistic forecast. He emphasized that his administration's economic reforms are beginning to yield positive results, signaling potential future improvements in the currency's value.
