Naira Achieves Two-Year High in Official Market Amid Rising Foreign Reserves
Nigeria's currency demonstrated remarkable strength on Wednesday, January 28, 2026, reaching its highest level in nearly two years within the official foreign exchange market. This significant appreciation comes alongside a substantial increase in the country's external reserves, which have climbed to their highest point in approximately eight years.
Official Market Performance and Data Analysis
According to data released by the Nigerian Foreign Exchange Market (NFEM), the naira appreciated to N1,400.47 per US dollar, marking a gain of 75 kobo or 0.05 percent from the previous day's rate of N1,401.22. This represents the first time the currency has traded around the N1,400 threshold since May 2024, indicating a sustained recovery trajectory.
The currency's performance has shown consistent improvement throughout the preceding week. Starting from N1,418.95 on January 26, the naira advanced to N1,401.22 on January 27 before firming further to its current position. This steady rally has reinforced optimism regarding foreign exchange market stability and economic management.
Parallel Market Follows Positive Trend
The positive momentum extended to the parallel market, where the naira appreciated to N1,470 per dollar, achieving its strongest level since December 1, 2025. After maintaining stability at N1,490 per dollar between January 26 and 27, the currency experienced sharp gains on January 28.
This development has effectively narrowed the gap between official and parallel market rates, reflecting growing confidence among currency traders and market participants. The convergence between these markets suggests improved transparency and reduced arbitrage opportunities.
Foreign Reserves Reach Eight-Year Peak
The currency's resurgence finds strong support in Nigeria's external reserves, which have reached $46.012 billion as of January 22, 2026. This represents the highest reserve level recorded in about eight years, with the last comparable figure occurring in August 2018.
Current data indicates an increase of approximately $510 million since the beginning of the year, rising from $45.5005 billion on December 31, 2025. According to Central Bank of Nigeria figures, about 1.18 percent of these reserves remain in blocked funds.
In his New Year message, President Bola Tinubu highlighted that the growing reserve buffer has helped cushion the naira against external shocks. The President expressed confidence that Nigeria's external position would continue strengthening throughout 2026.
Oil Sector Reforms Drive Economic Improvements
A significant driver behind the reserve accumulation has been improved crude oil production following comprehensive reforms in the oil and gas sector under the Petroleum Industry Act. According to the Nigerian Upstream Petroleum Regulatory Commission, Nigeria's crude oil production, including condensates, averaged 1.64 million barrels per day in 2025.
This represents a 5.81 percent increase from the 1.55 million barrels per day recorded in 2024. When excluding condensates, crude oil production showed even more substantial growth, increasing by 8.21 percent year on year from 1.34 million barrels per day in 2024 to 1.45 million barrels per day in 2025.
Despite a slight dip in December 2025, where output fell by 3.42 percent month on month to 1.54 million barrels per day, the overall production gains have significantly strengthened Nigeria's fiscal outlook. The enhanced production profile has boosted government revenues, supported reserve accumulation, and improved overall fiscal performance.
FX Reforms and Economic Outlook
The currency's strong performance represents the naira's most robust showing since the Central Bank of Nigeria introduced the Electronic Foreign Exchange Matching System. This reform initiative aims to improve transparency and price discovery within the official market, contributing to more efficient foreign exchange operations.
Together, rising reserves and sustained foreign exchange reforms are reinforcing the naira's recovery while strengthening confidence in Nigeria's macroeconomic outlook. The combination of improved oil production, effective policy implementation, and growing external buffers creates a foundation for continued economic stability and potential growth.
As Nigeria navigates both domestic and international economic challenges, these developments signal positive momentum for the country's financial markets and broader economic prospects. Market observers will continue monitoring how these trends evolve and impact various sectors of the Nigerian economy in the coming months.
