Naira extends rally in first trading day of 2026 

…As CBN drives weekly FX inflows amid fresh pressure in parallel market

The naira extended its appreciation against the dollar at the official foreign exchange (FX) market on the first trading day of 2026, supported by continued intervention by the Central Bank of Nigeria (CBN) and improved FX inflows, even as renewed demand pressure emerged in the parallel market following the commencement of the new tax law.

Data published by the CBN showed that the naira strengthened by N4.91, representing a 0.34 percent gain, as the dollar was quoted at N1,430.84 on Friday compared with N1,435.75 on Wednesday, the final trading session of 2025, at the Nigerian Foreign Exchange Market (NFEM).

On a year-on-year basis, the local currency recorded a significant appreciation of N110.52, translating to a 7.7 percent gain from N1,541.36 traded at the official window at the beginning of 2025. The performance reflects sustained policy efforts by the apex bank to improve FX liquidity, rebuild confidence and narrow volatility in the FX market.

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In contrast, the parallel market, also known as the black market, witnessed renewed depreciation as demand pressure resurfaced. Market participants attributed the pressure to individuals rushing to withdraw naira balances and convert to dollars following the commencement of the new tax regime, amid concerns about potential changes in transaction costs and compliance requirements.

Traders said the heightened demand pushed the naira to depreciate by N15, or 1 percent, to close at N1,500 on Friday, the first trading day of 2026, compared with N1,485 recorded on Wednesday, the last trading day of 2025.

Despite the short-term pressure, the naira remains stronger in the parallel market on a year-on-year basis. Compared with January 2025 levels, the currency appreciated by N160, or 10.67 percent, closing at N1,500 versus N1,660 traded at the beginning of January 2025, underscoring the broader gains recorded over the past year.

Meanwhile, total FX inflows declined sharply to about $74.8 million last week, representing a drop of roughly 95 percent week-on-week from the $1.46 billion recorded in the previous week, according to a report by the Coronation Merchant Bank Research Department. The sharp moderation followed exceptional inflows recorded earlier, largely driven by seasonal factors and one-off transactions.

Local sources dominated FX supply, accounting for about 70 percent or $52.0 million of total inflows. The CBN led domestic supply with $19.6 million, while exporters and importers contributed about $16.5 million. In contrast, international inflows remained subdued at $23.0 million, with foreign portfolio investors accounting for approximately $16.9 million, largely through investments in fixed-income instruments.

Read also: Naira ends year with over N100 gain as external reserves rise by 11.3 percent

The naira had strengthened across markets ahead of the Christmas break, supported by sustained CBN intervention and improved FX liquidity. It closed at N1,443.38 per dollar at the NFEM, representing a 1.46 percent gain on a week-on-week basis. The parallel market rate also appreciated to N1,475 per dollar, up 1.36 percent week-on-week, pointing to improved FX stability and narrowing market distortions.

Nigeria’s external reserves, which provide the CBN with critical capacity to support the naira and manage FX volatility, rose to $45.50 billion as of December 31, 2025. This represents an 11.3 percent increase from $40.87 billion recorded in the corresponding period of December 31, 2024, according to data from the CBN. The steady rise in reserves continues to underpin confidence in the apex bank’s ability to sustain FX market stability in 2026.

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks.

She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.

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