Naira Drops N17 as CBN Intervenes to Narrow Official-Parallel Market FX Gap
The Nigerian naira commenced the new month with a significant depreciation of N17 against the US dollar, continuing the downward trend observed during trading on Friday, February 27, 2026. This development follows strategic interventions by the Central Bank of Nigeria aimed at reducing the substantial gap between official and parallel market exchange rates.
Weekly Depreciation and Market Performance
According to official data released by the Central Bank of Nigeria, the naira experienced a weekly depreciation of 1.25% against the US dollar. The dollar traded at N1,363.39 on Friday, February 27, 2026, marking a reversal from the previous week's strong rally. Throughout the five trading sessions of last week, the naira depreciated by 1.04%, declining from N1,349.24 recorded on Monday, February 23, 2026.
On a daily basis, the local currency dropped by 0.3% or N3.57 per dollar, compared to the N1,359.82 traded on Thursday, February 26, 2026, at the Nigerian Foreign Exchange Market. In the unofficial parallel market, the naira suffered a more substantial weekly loss of N30, closing at N1,370 on Friday, February 27, 2026. This represented a 2.19% decline from the N1,340 quoted the previous day.
Narrowing Exchange Rate Gap
Market analysis reveals that the exchange rate gap between the official and parallel market windows narrowed significantly to N7 from the N11 recorded on Thursday, February 26, 2026. This represents a 0.5% closure and indicates greater convergence between the two market segments. The narrowing gap demonstrates the effectiveness of the Central Bank's interventions in creating more unified exchange rate conditions.
Before last week's depreciation, the naira had been experiencing a remarkable rally against the dollar, reaching a two-year high of N1,335.96 on February 17, 2026, at the official market. Financial experts attribute the recent pullback to the Central Bank's strategic entry into the foreign exchange market, where it mopped up excess dollars to moderate the naira's gains and prevent an excessively strong rally.
External Reserves Reach 13-Year High
In a significant development for Nigeria's economic stability, the Central Bank disclosed that the country's external reserves have increased to $50.45 billion. This represents the highest reserve level in 13 years and reflects strong investor confidence in Nigeria's foreign-exchange position and improved liquidity conditions.
Central Bank Governor Olayemi Cardoso announced this milestone during the conclusion of the 304th Monetary Policy Committee meeting in Abuja. According to the governor, the current reserve level is sufficient to cover approximately 9.68 months of imports, providing Nigeria with an enhanced buffer against external economic shocks.
Governor Cardoso attributed the reserve growth to several factors, including higher export earnings and increased remittance inflows. These developments have supported foreign exchange liquidity and renewed investor confidence in Nigeria's economic management.
Expert Analysis and Market Outlook
Financial analysts at CardinalStone noted that the naira had experienced steep appreciation in recent weeks, gaining about 6.9% year-to-date as of last week and reaching one of its strongest levels in two years. Despite this rally, the parallel market had been trading at approximately a 5.7% premium to the official rate before narrowing to around 3.2% following renewed dollar sales to Bureau de Change operators.
Former Deputy Governor of the Central Bank, Tunde Lemo, expressed confidence in the sustainability of the naira's stability and the steady growth of Nigeria's external reserves. Lemo attributed these improvements to structural economic reforms, enhanced trade dynamics, and disciplined monetary management practices.
Comercio Partners, in its macroeconomic outlook for the first half of 2026, identified 2025 as a turning point for the local currency. The firm noted that this period represented the naira's first annual appreciation in 13 years, with the currency appreciating by 6.87% against the dollar in the official market during 2025.
Market experts anticipate that the naira will continue its rally in the coming months, supported by Nigeria's increased reserve position and foreign currency earnings from oil sales. The ongoing geopolitical tensions involving Iran, Israel, and the United States are expected to influence global oil markets and potentially benefit Nigeria's export revenues.
Regional Currency Performance
In a positive development for Nigeria's currency management, recent data released in February 2026 revealed that the naira did not feature among Africa's 10 weakest currencies, despite recent depreciation due to Central Bank interventions. The ranking, compiled using figures from the Forbes currency calculator, highlights countries whose currencies have depreciated sharply against major global currencies such as the US dollar and euro.
While the naira has faced significant challenges in recent years, its absence from this list of Africa's weakest-performing currencies indicates relative stability compared to regional counterparts. This positioning reflects the effectiveness of Nigeria's monetary policies and economic management strategies in maintaining currency stability amidst global economic uncertainties.
