The naira ended January 2026 on a strong note, recording notable gains against the United States dollar in Nigeria’s official foreign exchange market.
Data from the Central Bank of Nigeria (CBN) shows that the official Nigerian Foreign Exchange Market (NFEM) rate strengthened from a weekly high of ₦1,422.07 per dollar on Friday, January 23, to ₦1,386.55 per dollar at the close of trading last Friday. This represents a 2.47 per cent appreciation.
The local currency maintained a steady upward movement throughout the final week of January, beginning on January 26 when it traded at ₦1,418.95 per dollar and gradually improving to its strongest level of ₦1,386.55 per dollar by the end of the week. Although the exchange rate touched a high of ₦1,423.50 per dollar earlier in the week, the narrowing gap between daily highs and lows towards month-end pointed to increased market stability.
The strengthening of the official exchange rate is significant for the Nigerian economy, as it serves as the benchmark for corporate foreign exchange transactions, including payments for imports, medical expenses, and school fees processed through the banking system. Analysts believe that sustained appreciation could help reduce inflationary pressures, particularly on imported goods.
Cowry Assets Management Limited, in its weekly market report, noted that the naira also appreciated in the parallel market, gaining 2.11 per cent to close at ₦1,444.19 per dollar. Looking ahead, the firm projected moderate gains for the currency, supported by steady oil revenues, improved non-oil inflows, and a favourable trade balance. The analysts added that stable to mildly bullish oil prices, driven by consistent global demand and the US Federal Reserve’s decision to keep interest rates unchanged, could further support the naira.
Meanwhile, CardinalStone reported that the naira traded at ₦1,465.00 per dollar in the parallel market.
AIICO Capital also observed an appreciation in the parallel market during January, with the naira strengthening by 1.28 per cent from ₦1,490.00 per dollar to ₦1,460.00 per dollar at month-end. According to the firm, the month was marked by relative stability, aided by improved foreign exchange liquidity from foreign portfolio investors and local market participants, alongside minimal intervention by the CBN.
The analysts also highlighted that Nigeria’s external reserves increased by $687.40 million month-on-month to $46.18 billion, driven by stronger FX inflows, oil earnings, remittances, and ongoing stabilisation efforts.
AIICO Capital projected that while the naira may remain volatile, it is expected to stay broadly stable with modest appreciation in February. The firm cited strong external reserves, expectations of sustained high crude oil prices, and continued monetary and fiscal reforms aimed at attracting foreign inflows as key support factors. It added that downside risks from external shocks are likely to remain limited in the near term.
However, Bloomberg reported that uncertainty surrounding new tax laws has increased demand for dollars in the parallel market. A bureau de change operator, Abubakar Muhammed, told the publication that individuals are converting naira into dollars to protect their assets or avoid possible scrutiny from tax authorities, adding that demand could ease once there is clearer guidance on the tax measures.
Confirming this trend, the Chief Executive Officer of Financial Derivatives Company, Bismarck Rewane, said concerns about potential account freezes by tax authorities have driven people to hold dollars as a precautionary measure.
