The Nigerian naira has opened the 2026 financial year on a powerful note, recording significant gains against the US dollar and extending the stability achieved in the previous year. Data released by the Central Bank of Nigeria (CBN) shows that on the first trading day of the year, the local currency appreciated to N1,430.84 per dollar at the official Nigerian Foreign Exchange Market window.
CBN's Aggressive Strategy Yields Results
This early strength is a direct continuation of the momentum built throughout 2025, a period characterized by aggressive foreign exchange interventions and sweeping reforms implemented by the apex bank. The CBN's sustained efforts, including a massive $7.5 billion injection into the FX market last year, have been pivotal in taming the extreme volatility that plagued the currency in earlier periods. In the final week of 2025, the naira was trading around the N1,440 per dollar mark, indicating a steady climb into the new year.
Market analysts highlight a dramatic shift in the currency's behavior. According to a report from Meristem Securities, while the average exchange rate in 2025 was N1,519.63 per dollar—slightly weaker than the N1,486.03 recorded in 2024—the most critical improvement was in volatility. Volatility plummeted to 0.53% in 2025 from 4.58% in 2024. This sharp decline signals deeper FX liquidity and stronger buffers, creating a more predictable trading environment.
Structural Reforms and Reserves Build Confidence
The stability is largely attributed to structural changes championed by the CBN. The introduction of the Electronic Foreign Exchange Matching System and the FX Code in December 2024 enhanced transparency, improved price discovery, and curbed speculative activities. These measures have collectively restored investor confidence, ensuring that exchange rate movements are more reflective of genuine market fundamentals.
Nigeria's external reserves provided a formidable backstop. By the end of 2025, the reserves had grown by 10.60% year-on-year to $45.21 billion, up from $40.9 billion at the close of 2024. This accumulation was supported by higher trade receipts, increased capital importation, and proceeds from Eurobond issuances, strengthening the country's capacity to defend the naira's value.
Analysts Project Sustained Stability for 2026
Financial institutions are optimistic about the naira's trajectory for the remainder of 2026. Meristem Securities projects the currency will trade within a band of N1,350 to N1,528.57 per dollar. This outlook is predicated on expectations of sustained foreign inflows, resilient external reserves, and planned foreign currency issuances by the Federal Government.
Other leading firms echo this sentiment. Coronation Research forecasts a trading range of N1,400 to N1,500 per dollar, citing factors like higher oil production, reduced dependence on fuel imports, and improved FX liquidity from non-oil export earnings. Similarly, AIICO Capital expects the naira to hover around current levels, barring any major external shocks.
In its official 2026 outlook, the CBN has reaffirmed its commitment to maintaining stability in the foreign exchange market. The bank stated it will continue to deploy appropriate policy tools to attract foreign investment and balance price stability with economic growth, setting a clear tone for a steadier naira throughout the year.
The naira's performance in 2025 was historic, closing the year with its first full-year appreciation in over 13 years. It strengthened by 6.5% year-on-year, ending December 31 at ₦1,435 to the dollar compared to ₦1,535 at the end of 2024. This milestone, last achieved in 2012, underscores the tangible impact of the CBN's reformed approach to foreign exchange management.
