Financial experts are predicting a period of relative calm for the Nigerian naira in the coming year, with the Central Bank of Nigeria (CBN) expected to focus on maintaining stability rather than pushing for a sharply stronger currency. This outlook aligns with the Federal Government's recently announced foreign exchange expectations for 2026.
Analysts Project Narrow Trading Band for the Naira
According to a consensus among economic analysts, monetary authorities under the leadership of CBN Governor Olayemi Cardoso will aim to consolidate recent gains in the foreign exchange market. The primary objectives are to reduce volatility and strengthen investor confidence. Research firm SBM Intelligence has provided a specific forecast, projecting that the naira will trade within a band of N1,470 to N1,520 per US dollar throughout 2026.
This projection closely mirrors the assumption in the Federal Government's Medium-Term Expenditure Framework (MTEF), which uses a rate of N1,512 to the dollar for budget planning. The firm emphasized that achieving stability is a more realistic and beneficial goal for the economy than targeting significant appreciation in the near term.
Recent Reforms and Market Performance
The current relative stability of the naira is attributed in part to recent policy interventions. The introduction of the Electronic Foreign Exchange Matching System in December 2024 is credited with improving transparency and price discovery, helping to rebuild trust after prolonged market distortions.
Market data reflects this calming trend. At the official Nigerian Foreign Exchange Market (NAFEM), the naira recently appreciated to N1,456.56 per dollar. In the parallel market, rates have held steady around N1,480 to N1,482, significantly narrowing the gap between the two segments to less than N20, a marked improvement from over N100 a year ago.
Nigeria's external reserves stood at $45.21 billion as of December 19, 2025, according to CBN data. Analysts view the slight decline as modest and not detrimental to the medium-term outlook, especially with anticipated stronger foreign exchange inflows from crude oil exports and portfolio investments.
Why Stability Trumps a Stronger Currency
Experts argue that a predictable exchange rate environment is more valuable for economic planning than a rapidly appreciating naira. Ayokunle Olubunmi, Head of Financial Institutions Ratings at Agusto & Co., noted that the CBN's approach reflects a focus on underlying fundamentals and policy consistency, which are crucial for sustaining market confidence.
A stable rate allows businesses and investors to plan with certainty. Conversely, a sharply stronger naira could hurt the competitiveness of Nigerian exports, while excessive depreciation would fuel inflationary pressures, harming consumers.
While the dominant view centers on stability, some analysts see room for modest gains. Bismarck Rewane, CEO of Financial Derivatives Company, suggested that improved reserves and stronger FX supply could support a gradual firming of the naira to a range of N1,450 to N1,500 per dollar.
In support of the local currency, the CBN has been active in the market. Last week, the apex bank sold $635 million to authorised dealers, following an earlier injection of $150 million at the start of the week, as part of ongoing efforts to boost liquidity and defend the naira.
Overall, the consensus for 2026 is clear: the CBN's primary mission will be to preserve stability, limit wild swings in the exchange rate, and sustain the confidence of investors as broader macroeconomic reforms continue to unfold.
