Weak dollar seen as positive as naira hits record N1,396.99/$

The naira strengthened to N1,396.99 per dollar in the official foreign exchange market on Thursday, marking its strongest performance in two years as the dollar continues to weaken and oil prices take flight.

Data published by the CBN showed that the naira appreciated by N264.13 as the dollar was quoted at N1,396.99 on Thursday, representing a gain of 18.91 percent compared with N1,616.12 quoted in December 2024.

“A weak dollar is dislocating many markets, but it is good for Africa, as we are seeing with the naira,” Charlie Robertson, author of The Time Travelling Economist, said in an emailed response to BusinessDay.

According to a foreign media report, the US dollar has fallen to its lowest level in four years after Donald Trump brushed off concerns over the currency’s decline, prompting investors to seek refuge in traditional safe-haven assets such as gold and the Swiss franc.

Read also: Naira hits N1,400/$ two-year record as reforms gain traction

The dollar dropped by 1.3 percent against a basket of currencies following the president’s comments on Tuesday, marking its fourth consecutive day of losses, before slipping by a further 0.2 percent on Wednesday morning.

On a daily trading basis, the naira appreciated marginally by N3.49 or 0.25 percent from N1,400.48 per dollar at Wednesday’s close on the Nigerian Foreign Exchange Market. During intraday trading, forex dealers quoted bids as low as N1,367 and N1,385 per dollar.

Manpreet Gil, chief investment officer, Africa, Middle East and Asia at Standard Chartered, said in an interview with BusinessDay that a strong dollar poses a challenge for Africa, while a weak dollar provides significant support.

According to him, the dollar’s decline in 2025, which he expects to extend further into 2026, has created a more favourable environment for capital inflows into emerging and frontier markets. He noted that weaker dollar conditions have historically supported stronger inflows into both equity and bond markets across Africa.

In the parallel market, the local currency gained N70 as the dollar traded at N1,470 on Thursday, representing a 4.76 percent appreciation compared with N1,540 quoted in December 2024. On a day-on-day basis, the naira strengthened by N5 from N1,475 recorded on Wednesday in the black market.

The rally in the naira also reflects rising confidence in Nigeria’s macroeconomic direction, supported by stronger foreign exchange inflows, rising external reserves and improved market governance.

Nigeria’s external reserves have also continued to rise, increasing by $5.82 billion or 14.45 percent to $46.11 billion as of January 28, 2026, from $40.29 billion recorded on December 2, 2024, according to data on the CBN website.

Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise, said the naira’s appreciation signals growing confidence in the economy and the ongoing reform agenda. He noted that the steady inflow of foreign exchange is largely driven by improved investor confidence in the current policy direction.

“Although we are unable to fully disaggregate the inflows due to data constraints, it is evident that significant flows are coming through the financial markets, with investments across various financial instruments,” Yusuf said.

Ayokunle Olubunmi, head of financial institutions ratings at Agusto & Co., said the improved performance of the currency has been supported by higher remittances, relatively firm oil prices, reduced disruptions in crude oil production and moderating imports of petroleum products.

Read also: Naira gains as reserves reach eight-year high of $46bn

Yusuf added that beyond portfolio flows, the economy is benefiting from inflows tied to routine economic activities, particularly exports and non-oil exports, which have recorded encouraging figures in recent months.

He also noted that remittances from the diaspora, inflows from the diplomatic community, donor funds and proceeds from recent Eurobond issuances have boosted foreign exchange supply. According to him, while oil production remains below optimal levels, the sector has remained relatively steady, with oil prices holding up and production disruptions easing.

Yusuf further pointed to growing contributions from domestic refining and export-oriented industries, including refined petroleum products, fertiliser and urea, which are increasingly generating foreign exchange earnings.

On sustainability, he said the naira’s strength could be maintained as long as the current reform momentum is sustained and there are no major external shocks. He identified volatility in the oil sector, particularly a sharp drop in oil prices or output, as the biggest risk.

“As long as the reforms continue and we avoid major shocks, especially from oil, the outlook remains sustainable. The main threat would come from severe external volatility, but so far, output has remained fairly stable,” Yusuf said.

Rising oil prices

Oil prices climbed some 4 percent to a five-month high on Thursday as concerns heightened over the impact of a U.S. attack on Iran, one of OPEC’s biggest crude producers.

Brent futures rose 3.7 percent to $70.90 per barrel Thursday, according to Bloomberg data.

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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