Naira Volatility: Navigating the Shifting Landscape of the Nigerian FX Market
The Nigerian Naira experienced a complex week, marked by depreciation at the official exchange rate whereas simultaneously demonstrating significant gains in the parallel market. This divergence highlights the ongoing challenges and potential shifts within Nigeria’s foreign exchange (FX) landscape.
Official Market Weakness: A Closer Look
Recent data from the Central Bank of Nigeria (CBN) indicates the Naira weakened to N1,346.32 per dollar on Friday, February 20, 2026, a N4.97 dip from the previous rate of N1,341.35. This represents the largest single-day depreciation since the beginning of the week, bringing the total weakening since Wednesday to N10.36. Compared to the previous week’s close of N1,355.42, the Naira has depreciated by 9.0.
Black Market Resilience: A Contrasting Trend
In stark contrast to the official market, the black market witnessed a substantial recovery. The Naira closed at N1,317 per dollar, a significant improvement from N1,440 recorded the previous week. This translates to a remarkable gain of N123 per dollar, suggesting strong demand for Naira and potentially indicating a response to recent CBN interventions.
CBN Intervention and FX Market Liquidity
The recent moves by the CBN to open official dollar markets to FX bureaux are aimed at closing the gap between official and street rates. This initiative, coupled with setting weekly dollar sales for FX bureaux, is intended to expand FX market liquidity and stabilize the Naira. Reports suggest this increased dollar funding is already having a positive impact, particularly in the parallel market.
External Reserves: A Stable Foundation
Despite the Naira’s fluctuations, Nigeria’s external reserves remain relatively stable, standing at $48.50 billion as of February 17, 2026. This provides a crucial buffer for the CBN as it continues to manage the FX market and implement policies to support the Naira.
Looking Ahead: Potential Future Trends
The dual trends observed this week suggest a period of continued volatility for the Naira. The success of the CBN’s interventions in bridging the gap between official and parallel market rates will be critical. Further gains in the black market could incentivize more transactions outside the official channels, potentially undermining the CBN’s efforts. The performance of the Zambian currency, also experiencing potential gains, may offer insights into regional FX dynamics.
Increased dollar sales to bureaux de change are expected to continue, aiming to alleviate pressure on the Naira and improve market accessibility. Still, sustained stability will likely depend on broader economic factors, including oil prices, foreign investment and overall economic growth.
FAQ
Q: What is causing the difference between the official and black market Naira rates?
A: The difference is often due to supply and demand imbalances, restrictions on access to official FX markets, and speculative activity.
Q: What is the CBN doing to stabilize the Naira?
A: The CBN is intervening in the FX market by selling dollars to bureaux de change and implementing policies to increase FX liquidity.
Q: What does this mean for businesses importing goods?
A: A weaker Naira increases the cost of imports, potentially leading to higher prices for consumers.
Q: How can individuals stay informed about Naira exchange rates?
A: Regularly check official CBN data, reputable financial news sources, and consult with financial advisors.
Pro Tip: Diversifying your investment portfolio can help mitigate the risks associated with currency fluctuations.
Explore more articles on Nigerian economic trends and FX market analysis. Subscribe to our newsletter for the latest updates and insights.
