The naira ended the five-day buying and selling week on a powerful word because the greenback crashed to N1,386.55 on the official overseas change market, marking its strongest efficiency in about two years for the reason that graduation of the Digital International Alternate Matching System (EFEMS), as reform features continued to realize traction.
Information from the Central Financial institution of Nigeria (CBN) confirmed that the naira appreciated by N35.08 because the greenback was quoted at N1,386.55, representing a acquire of two.53% in comparison with N1,421.63 quoted on the Nigerian International Alternate Market (NFEM) on Friday final week.
The native foreign money had opened the week at N1,418.95 per greenback and gained 2.34%, or N32.40, by the top of buying and selling. On a day-on-day foundation, the naira strengthened by N10.44, or 0.75%, on Friday to shut at N1,386.55, in comparison with N1,396.99 quoted on Thursday on the NFEM.
On the parallel market, also called the black market, the naira recorded an N18 appreciation to shut the week at N1,452 per greenback on Friday, representing a acquire of 1.23% from N1,470 per greenback recorded earlier within the week.
Nigeria’s exterior reserves, which give the CBN with the capability to defend the naira and stabilise the overseas change market, have continued to point out regular progress. In keeping with CBN knowledge, gross exterior reserves rose to $46.17 billion as of January 29, 2026.
Learn additionally: Weak dollar, rising oil prices lift naira to 2yr-high
A brand new report by Quest Service provider Financial institution famous that Nigeria’s overseas change market transitioned right into a extra steady regime in 2025, reflecting the cumulative impression of structural FX reforms, improved market transparency, and a sustained tightening of home monetary situations. Following the sharp dislocations witnessed in 2024, the naira’s efficiency improved materially, supported by stronger FX liquidity, enhanced worth discovery on the Nigerian Autonomous International Alternate Market (NAFEM), and a gradual restoration of offshore investor confidence.
On the coronary heart of this stabilisation was the CBN’s FX reform agenda. The settlement of legacy FX obligations, alongside the introduction of the Digital International Alternate Matching System, marked a decisive shift in direction of a extra clear and rules-based FX market. These reforms diminished data asymmetry, improved market depth, and narrowed the arbitrage hole between the official and parallel markets, which had widened sharply following the FX liberalisation in mid-2023. By 2025, worth convergence throughout market segments had largely been restored, considerably dampening speculative pressures on the foreign money.
In keeping with the report, improved confidence translated right into a significant restoration in FX inflows. Primarily based on knowledge from FMDQ, common month-to-month FX inflows elevated to $3.9 billion in 2025 from $2.6 billion in 2024, pushed primarily by overseas portfolio funding inflows searching for to benefit from elevated home market yields. The CBN’s restrictive financial coverage stance, geared toward curbing inflationary pressures and delivering constructive actual returns, was instrumental in anchoring these inflows and positioning offshore buyers as a key marginal provider of FX to the market.
FX provide was additional supported by sturdy oil-related inflows and resilient diaspora remittances, which continued to common round $5 billion per quarter, offering a steady and non-cyclical supply of overseas change liquidity.
These elements helped average change price volatility in the course of the yr. After opening 2025 at round N1,475 per greenback, the naira traded inside a comparatively slim vary for a lot of the yr earlier than closing at roughly N1,429 per greenback on the official window. Importantly, the compression of the unfold between the official and parallel market charges highlighted the effectiveness of ongoing FX reforms and the improved functioning of worth discovery out there.
Exterior financial situations additionally proved supportive. In 2025, the USA Federal Reserve applied three coverage price cuts amid easing inflationary pressures and indicators of cooling labour market situations, signalling the beginning of a broader easing cycle throughout superior economies. This shift improved international threat urge for food and triggered capital flows into higher-yielding rising and frontier markets, together with Nigeria.
In keeping with Quest Service provider Financial institution, these inflows performed a essential buffering function during times of softer FX receipts from conventional sources, significantly oil exports, which had been weighed down by decrease international crude costs regardless of incremental features in home manufacturing.
Looking forward to 2026, analysts at Quest Service provider Financial institution count on change price dynamics to stay broadly steady, though topic to intermittent pressures. Oil is anticipated to proceed dominating Nigeria’s exterior accounts, accounting for almost 88 % of merchandise FX earnings. Whereas a modest enchancment in crude oil manufacturing is anticipated, the oil worth outlook stays tilted to the draw back as a result of expectations of elevated provide from non-OPEC producers and a doubtlessly weaker international demand surroundings. Consequently, oil-derived FX inflows are more likely to stay risky and weak to exterior shocks.
That mentioned, FX liquidity situations are anticipated to stay supported by sustained portfolio inflows, regular diaspora remittances, and continued coverage self-discipline, the analysts mentioned.
