Naira Commences Trading Week with Notable Appreciation Amid Rising External Reserves
The Nigerian naira has opened the new trading week on a robust note, building upon gains achieved at the conclusion of the previous week. This upward trajectory is primarily attributed to a significant increase in the country's external reserves, which has bolstered confidence across Nigeria's foreign exchange markets. According to data released by the Central Bank of Nigeria, the local currency appreciated by 1.5 per cent week-on-week at the Nigerian Foreign Exchange Market, reflecting sustained improvements in the demand-supply balance.
Official Market Performance Shows Steady Rally
At the official market, the naira closed at N1,366.19 per dollar on Friday, marking an improvement from N1,386.55 recorded at the end of the previous week, which also represented the final trading session of January 2026. This performance capped a steady rally spanning five consecutive trading days, with the currency strengthening from N1,390.36 per dollar on Monday to achieve its strongest weekly close on Friday.
On a day-to-day basis, movements remained largely stable. The naira experienced a marginal depreciation of 13 kobo from N1,366.06 recorded on Thursday, indicating relative calm in official trading despite ongoing market adjustments and regulatory interventions.
Parallel Market Maintains Stability Amid Improved Sentiment
In the parallel market, often referred to as the black market, the naira maintained an unchanged position throughout the week. Street traders consistently quoted the currency at N1,450 per dollar, suggesting that the gap between official and unofficial rates did not expand further. This stability points to easing speculative pressure and improved sentiment among market participants, including traders and investors.
External Reserves Climb to $46.91 Billion, Enhancing Economic Capacity
Nigeria's external buffers continued their upward trend, providing fresh support to the national currency. Gross external reserves rose to $46.91 billion as of February 5, 2026, compared with $46.70 billion recorded on January 29, according to official figures from the Central Bank of Nigeria. This steady increase highlights the country's improved capacity to meet foreign obligations and intervene strategically in the foreign exchange market when necessary.
Foreign Exchange Inflows Improve as Outflows Experience Sharp Decline
Further reinforcing the naira's positive performance, net foreign exchange inflows witnessed a significant rise during the third quarter of 2025. Net inflow climbed to $17.46 billion, up from $14.46 billion in the preceding quarter. This improvement was largely driven by a sharp reduction in foreign exchange outflows, which fell by a substantial 32.01 per cent to $8.80 billion.
While aggregate foreign exchange inflow declined by 4.17 per cent to $26.27 billion, the more pronounced decrease in outflows resulted in a net inflow of $5.17 billion through banking channels. This represents a dramatic improvement from near-flat levels observed in the previous quarter, indicating healthier foreign exchange management.
Market Confidence Anchors Naira Amid Positive Economic Indicators
The combination of stronger external reserves, reduced foreign exchange outflows, and steady market confidence is collectively helping to anchor the naira as it begins the new week on a positive note. These developments suggest that Nigeria's economic management strategies are yielding tangible results in currency stabilization efforts.
However, market observers continue to monitor the exchange rate gap between official and parallel markets, which had previously widened beyond 6 per cent, reviving concerns about speculative activity and foreign exchange arbitrage. The disparity stood at approximately 6.4 per cent mid-week, equivalent to roughly N94, having briefly crossed the N100 mark toward the end of January, underscoring persistent liquidity challenges in the foreign exchange market.
