By Achile Danjuma
Nigeria’s currency market ended February on a cautiously optimistic note, with the naira closing at N1,368/$ in the official window, marking a modest month-on-month appreciation and reinforcing growing confidence around the country’s external position.
Data from the Central Bank of Nigeria (CBN) showed that the naira strengthened from an opening rate of N1,384.5/$ at the beginning of February to 1,368.5/$ at month-end. While the currency experienced some volatility in the final trading sessions, the overall trajectory signaled improving fundamentals, underpinned by stronger foreign exchange liquidity and rising external reserves now approaching the apex bank’s $51 billion target.
Nigeria’s gross external reserves climbed to approximately $49.5 billion as of February 25, edging closer to the CBN’s projected $51.04 billion year-end target for 2026. Earlier in the month, reserves had already crossed the $50 billion mark, reaching $50.45 billion as confirmed by CBN Governor Olayemi Cardoso.
The current reserve level represents the highest in about 13 years and is sufficient to cover more than 15 months of imports, a significant improvement from the fragile buffers recorded during the height of the currency crisis in 2023.
In the apex bank’s 2026 Macroeconomic Outlook, Cardoso had projected reserves would rise from $45.01 billion in 2025 to $51.04 billion in 2026. The drivers identified include stronger oil earnings, diaspora remittances, sovereign bond issuance, FX market reforms and increased domestic refining capacity.
The steady accretion to reserves has become one of the most important pillars supporting the naira’s rebound.
The naira’s current stability marks a stark contrast to mid-2023, when currency reforms triggered sharp depreciation following exchange rate unification. The liberalisation of the FX market, removal of fuel subsidies and cessation of central bank deficit financing initially created dislocations and volatility.
Over time, the local currency has found its feet, emerging as one of the best performing global currencies this year. The foreign reserves have also made significant gains, pushing through major hurdles and hitting $49.5 billion on February 25.
That means the CBN will be exceeding its forecast of over $51 billion reserves position this year.
The CBN stated, “The external reserves is projected at US$51.04 billion in 2026, compared with US$45.01 billion in 2025. The external reserves is expected to be boosted by reduced pressure in the FX market based on the anticipated rise in oil earnings, sovereign bond issuance, and diaspora remittance inflow.”
However, policymakers argued that the pain was necessary to restore credibility and attract foreign capital. Nearly three years later, early signs suggest the strategy may be bearing fruit.
The unification of exchange rates eliminated arbitrage opportunities and improved transparency in the FX market.
The clearance of over $7 billion in FX backlog obligations also reassured investors about repatriation risks, which had previously deterred foreign portfolio inflows.
As a result, Nigeria has re-emerged on the radar of global investors.
The naira recorded gains across both official and parallel markets during the review period. At the official window, the currency appreciated to close at N1,368.5/$, while in the parallel market it traded around N1,370/$.
Though the final week of February saw the naira weaken from N1,353.5/$ to N1,368.5/$, analysts describe the movement as routine market correction rather than structural weakness.
Market participants attribute the resilience largely to improved dollar supply conditions, driven by sustained CBN liquidity injections and rising non-oil inflows.
Managing Director of Afrinvest West Africa Limited, Ike Chioke, noted in a communication to investors that the naira is expected to trade within a similar band in the short to medium term, supported by bullish fundamentals and enhanced domestic refining activity.
Global oil prices also provided moderate support. Brent crude advanced to about $72 per barrel during the week, buoyed by geopolitical tensions in the Middle East that heightened fears of potential supply disruptions through the Strait of Hormuz. As of yesterday, Brent Crude has surged to $79.39 per barrel as the Middle East crisis persists.