The naira weakened by a maximum of 2.6% between March and June 2026, according to the World Bank's October 2026 Africa Economic Update, as the escalation of the Middle East conflict put African currencies under pressure. The report, which tracked exchange-rate movements across 22 African countries outside the CFA franc zone, found that most recorded currency depreciations during the second quarter of 2026 compared with their end-February levels, before the conflict intensified.
Regional Currency Performance: Ghana's Cedi and Others Hit Harder
Nigeria's decline was considerably smaller than that of several regional peers. Ghana's cedi lost as much as 10% of its value during the period, while the currencies of South Africa, Lesotho, Namibia and Eswatini each fell by up to 7.2%. The Democratic Republic of Congo's currency dropped by 6%, while Uganda's fell by 5%. The World Bank said that in seven of the 22 countries monitored, the maximum depreciation exceeded 5%.
The widespread currency pressure was attributed to higher oil and energy prices, which raised import costs for net energy-importing countries and drove up demand for US dollars. Heightened geopolitical uncertainty also prompted investors to move capital away from emerging and frontier markets, while countries with large external debt obligations saw the local-currency cost of servicing dollar-denominated debt rise.
Naira Recovery by August 2026
By August 2026, the naira had recovered some of those losses, posting a 1.9% improvement from the March-to-June lows. That recovery placed Nigeria among the African economies whose currencies had bounced back from the worst of the pressure. In comparison, Ghana's cedi remained 2.5% weaker than its end-February level by August, while Uganda's currency was still down 3.1%. South Sudan recorded one of the largest remaining declines at 5.5%. The World Bank said only 10 currencies were still weaker than their end-February levels by the end of August.
Oil Exports and Growth Forecast
Nigeria's status as a major crude oil exporter helped shield the naira from a deeper decline. Higher oil prices during the period boosted export earnings for Nigeria and Angola, providing additional foreign currency inflows that helped offset broader exchange-rate pressures.
The World Bank has raised its 2026 growth forecast for Nigeria to 4.3%, up from an estimated 4.0% expansion in 2025, pointing to improving macroeconomic stability, stronger investor confidence and a gradual recovery in private investment, Vanguard reports. The bank projects the economy to grow by 4.4% annually in both 2027 and 2028.
However, the bank cautioned that Nigeria still faces significant risks, including tighter global financial conditions, a prolonged Middle East conflict, insecurity, climate-related shocks, disruptions to oil production and higher government spending expected ahead of the 2027 elections. It said sustaining reform momentum and building stronger policy buffers would be essential to locking in the recent gains.
Earlier, Legit.ng reported that the Nigerian naira strengthened against the United States dollar at the official foreign exchange market, as increased trading activity boosted market turnover. The local currency appreciated by N1.31, or 0.09%, to close at N1,329.16/$1 in the Nigerian Foreign Exchange Market (NFEM), compared with N1,330.47/$1. However, the naira weakened against the British pound sterling and the euro during the same trading session.
