In a significant turnaround for the Nigerian currency, the naira has posted its first weekly gain of the year 2026, marking a positive shift after a period of sustained pressure. The appreciation, amounting to N7.68 against the US dollar at the official foreign exchange window, has injected a wave of optimism into the market, largely fueled by strategic actions from the Central Bank of Nigeria (CBN).
Breaking the Bearish Trend: A Detailed Look at the Numbers
Official data from the Nigerian Foreign Exchange Market (NFEM) reveals that the naira closed trading on Friday, January 9, 2026, at a rate of N1,423.16 per dollar. This represents a notable improvement from the N1,430.84 per dollar rate recorded at the end of the previous week, translating to a 0.5 per cent week-on-week appreciation. The gain effectively reverses the negative trajectory that had characterized the market since the beginning of the year.
On a daily basis, the currency also showed strength, appreciating by 0.2 per cent from the N1,419.71 rate quoted on Thursday, January 8, 2026. Over the course of the week's five trading sessions, the naira gained a total of N6.14 from its opening position of N1,429.30 on Monday. Notably, the parallel market exhibited unusual calm during this period, with the exchange rate holding steady at approximately N1,490 per dollar, indicating a potential reduction in speculative activities.
The Driving Forces Behind the Naira's Rebound
The primary catalyst for this currency rally is a substantial recovery in foreign exchange supply within the official market. According to FMDQ data, total FX inflows surged by 38 per cent month-on-month to reach $2.8 billion in December 2025. This rebound is crucial, coming after a sharp 67 per cent contraction witnessed in November. However, financial analysts caution that despite the improvement, December's supply level remains the second weakest recorded in the past 16 months, highlighting ongoing vulnerabilities in Nigeria's foreign exchange inflow channels.
A significant portion of this recovery is directly attributed to the Central Bank of Nigeria. The apex bank dramatically increased its market participation, selling $654 million into the system in December 2025. This figure is more than double the $318 million sold in the previous month, demonstrating a decisive move to improve liquidity and curb volatility. This aggressive intervention has been pivotal in restoring a degree of confidence among businesses and investors.
Reserves Build and Mixed Inflow Signals
Supporting the CBN's capacity to intervene is a strengthening of Nigeria's external reserves. The reserves climbed to $45.66 billion as of January 7, 2026, up from $45.50 billion at the end of December 2025. This buildup provides the monetary authority with greater firepower to manage exchange rate pressures and stabilize the market when necessary.
The breakdown of December's inflows presents a mixed picture. While foreign portfolio investments saw a modest 7 per cent increase to $632 million—a figure still far below the $3.5 billion peak of October 2025—other areas showed more dramatic movement. Notably, foreign direct investment (FDI) experienced an explosive surge of over 380 per cent to $50.1 million. Conversely, corporate inflows dipped by 5 per cent to $420 million.
Market analysts from institutions like FBNQuest suggest that the improved liquidity and CBN's firm stance could lead to enhanced investor activity in the coming months. Factors such as attractive carry trade opportunities and expectations of sustained policy support are seen as potential drivers that could help the naira consolidate and build upon this newfound momentum, offering a glimpse of stability for the Nigerian economy.
