Naira Records Strongest Performance in Months as External Reserves Strengthen
Nigeria's currency has achieved a significant milestone in the official foreign exchange window, appreciating sharply against the US dollar on Tuesday, January 27, 2026. The naira strengthened to approximately ₦1,401.22 per dollar, representing its firmest position since the Central Bank of Nigeria implemented comprehensive foreign exchange reforms.
Official Market Shows Robust Gains
According to the Central Bank's daily foreign exchange report, the local currency appreciated by 1.27 percent during the trading session. Market operators attribute this positive movement to improved dollar supply and stronger participation from banks and authorized dealers. The official window experienced increased transaction volumes, with enhanced liquidity helping to narrow volatility and reduce speculative demand.
This development reinforces the growing consensus that reforms aimed at unifying exchange rates and improving price discovery mechanisms are beginning to yield tangible results. The narrowing gap between official and parallel market rates reflects improving confidence across both regulated and informal segments of Nigeria's foreign exchange market.
Parallel Market Follows Positive Trend
The positive momentum extended beyond the official window, with the parallel market also recording modest gains. Channel checks revealed the naira appreciating by approximately 0.33 percent to trade around ₦1,476 per dollar. While the spread between official and parallel rates persists, analysts note that reduced arbitrage opportunities and stronger supply conditions are contributing to more stable pricing across market segments.
External Reserves Provide Critical Support
The naira's rally coincides with rising external reserves, which have strengthened the Central Bank's capacity to intervene when necessary and support market liquidity. Higher reserves serve as a crucial confidence signal for foreign investors, particularly portfolio investors who remain sensitive to currency risk.
Market observers point to consistent inflows from export earnings, improved remittance flows, and cautious monetary management as key factors contributing to the naira's improved outlook in recent weeks. These elements have collectively bolstered market sentiment and supported the currency's upward trajectory.
Global Oil Dynamics Present Mixed Outlook
While domestic indicators appear positive, global oil markets present a more complex picture. April Brent crude futures declined 0.69 percent to $64.32 per barrel, while March West Texas Intermediate fell 0.64 percent to $60.27. This softening follows expectations of increased crude supply from international sources, including Kazakhstan's Tengizchevroil project and US energy operations.
For Nigeria, softer oil prices could pose revenue challenges, though analysts suggest that improved foreign exchange management may help cushion the impact in the near term. The stronger naira offers temporary relief for businesses, investors, and consumers who have been grappling with persistent currency volatility.
Sustaining Momentum Requires Consistent Policy
Despite the encouraging performance, analysts emphasize that maintaining these gains will depend on several critical factors:
- Consistent policy implementation by monetary authorities
- Continued accretion to external reserves
- Stable macroeconomic conditions
- Sustained investor confidence in reform measures
The naira's current strength represents a rare moment of relief for Nigeria's economy and may signal a potential turning point if supportive conditions persist. However, structural challenges remain, requiring ongoing vigilance from policymakers and market participants alike.
This development follows recent volatility in the foreign exchange market, where the naira had previously weakened against major currencies due to stronger demand and limited dollar supply. The current appreciation demonstrates the dynamic nature of Nigeria's currency markets and the ongoing impact of policy interventions.
