THE naira ended last week on a positive note at the official foreign exchange (FX) market, recording its first weekly appreciation of the year. By Friday, the local currency had strengthened by N7.68, buoyed by improved market liquidity and sustained support from the Central Bank of Nigeria (CBN), which helped lift overall sentiment.
The currency’s performance coincided with a recovery in dollar availability in the market. Data from FMDQ showed that FX supply increased by 38 percent month on month in December 2025, largely reflecting higher sales by the CBN.
According to figures released by the CBN, the naira appreciated by 0.5 percent week on week at the Nigerian Foreign Exchange Market (NFEM). The dollar closed at N1,423.16 on Friday, compared with N1,430.84 at the end of trading the previous week. On a daily basis, the naira also recorded a mild 0.2 percent gain from N1,419.71 quoted on Thursday.
Across the five trading sessions during the week, the currency strengthened by N6.14, rising from N1,429.30 on Monday, the first trading day of the year. Meanwhile, activity in the parallel market remained unchanged, with the naira exchanging at N1,490 per dollar.
Nigeria’s external reserves also recorded an uptick, providing the CBN with additional capacity to stabilise the FX market and curb volatility. Information published on the CBN’s website showed that reserves climbed to $45.66 billion as of January 7, 2026, up from $45.50 billion on December 31, 2025. The 0.4 percent increase suggests improved inflows and easing pressure in the FX market.
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Overall FX inflows into the market rose sharply by 38 percent month on month to $2.8 billion in December 2025, recovering from the steep 67 percent decline seen in November. Despite the rebound, December’s supply level remained the second weakest in the last 16 months, underscoring persistent vulnerabilities in inflow dynamics. While domestic corporate inflows fell by 5 percent month on month to $420 million, other sources of FX supply posted gains during the period.
Foreign portfolio investment inflows edged up by 7 percent month on month to $632 million in December, a significant slowdown compared with the $3.5 billion recorded in October. The moderation in portfolio flows was attributed to reduced risk appetite toward year-end, a period when foreign investors typically cut back exposure, take profits, and rebalance portfolios.
Within the inflow mix, foreign direct investment remained the smallest component but recorded the strongest growth. FDI inflows surged by 381.7 percent to $50.1 million in December, up from $10.4 million in November. Domestically, FX inflows from exporters and importers, as well as individuals, also contributed to the month-on-month improvement, rising by 49 percent to $683 million and by 88 percent to $275.3 million, respectively.
Naira projection
Chief Executive Officer of Financial Derivatives, Mr Bismark Rewane, predicts that sustained exchange-rate stability could be central to investor confidence, business planning and macroeconomic predictability.
CardinalStone says that improving fundamentals warrant a re-rating of the naira in 2026. “We are of the view that the naira could trade within the band of N1,350.00/$–N1,450.00/$,” said in its newly released economic outlook,” it says, noting that the projected appreciation is supported by improved liquidity in the FX market and the growing reserves.
CardinalStone points to a moderating inflation and a current account surplus that reached an all-time high in 2025, we well as sustained FX transparency and foreign inflows, as bulwarks for the naira in 2026.
The firm highlights pre-election worries, an unanticipated slump in exports, especially non-oil, and the ongoing global trend of tightening border controls as critical factors that could reduce Nigerian exports, thereby dampening the appreciation of the naira and distrting the FX market expectations this year.
