NIGERIA’s currency has strengthened to its best level in nearly two years, with the naira closing at N1,400 per dollar at the official foreign exchange (FX) market, a milestone that signals growing confidence in the country’s economic reforms and improving financial stability.

Data from the Central Bank of Nigeria (CBN) show that the naira appreciated by N18.47 from the N1,418.95/$ recorded on January 26, marking its strongest performance since early 2024. Analysts say the rebound reflects the impact of President Bola Tinubu’s wide-ranging economic reforms, particularly in the foreign exchange and monetary policy space.

The strengthening trend was also evident in the parallel market, where the naira posted notable gains. At the street market, popularly referred to as the black market, the currency appreciated by N65, moving from about N1,540/$ two years ago to around N1,475/$ as of Tuesday. This gap between the official and parallel rates suggests increased pressure from speculative demand.

Market observers note that the last time the naira traded at around 1,400 to the dollar across both the official and parallel segments was on March 21, 2024. That rally followed a major policy breakthrough when the CBN announced the final settlement of all verified foreign exchange backlogs. The move fulfilled a key pledge by CBN Governor Olayemi Cardoso to clear inherited FX obligations, estimated at about $7 billion. The clearance helped restore confidence among foreign investors and multinational companies that had been unable to repatriate funds.

Since then, the authorities have continued to tighten oversight in the FX market while introducing reforms aimed at improving transparency, reducing arbitrage, and attracting foreign inflows. The Tinubu administration’s push to unify exchange rates, remove distortions, and liberalise the market has gradually begun to reshape trading behaviour and improve liquidity, analysts say.

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One of the strongest signals supporting the naira’s recovery is the sharp rise in Nigeria’s external reserves. According to figures published on the CBN’s website, gross external reserves climbed by $5.77 billion, or 14.3 percent, to $46.06 billion as of January 27, 2026. This compares with $40.29 billion recorded on December 2, 2024.

“The higher reserves position gives the central bank greater capacity to intervene in the FX market, smooth volatility, and meet legitimate FX demand from businesses, airlines, manufacturers, and investors,” said a London-based economist, Mr Ralph Atuche.

Economists say the improvement also reflects stronger dollar inflows from oil exports, diaspora remittances, and renewed interest from foreign portfolio investors.

Beyond FX policy, broader macroeconomic adjustments are also supporting the naira. The government’s fiscal reforms, including subsidy removal, and improved revenue collection have reduced pressure on the currency. Meanwhile, the CBN’s tighter monetary stance has helped rein in excess liquidity and curb speculative attacks on the naira.

Although challenges remain, including inflation, high import demand, and weak domestic production, analysts believe the recent gains signal a turning point. A more stable currency, they argue, could help lower import costs, reduce inflationary pressures, and improve planning for businesses that rely on foreign inputs.

For households and firms alike, a stronger naira offers some relief after years of sharp depreciation.

Naira still undervalued

Managing Director of Financial Derivatives Company, Mr Bismarck Rewane, said at the 2026 Economic Outlook forum hosted by the Association of Corporate Treasurers of Nigeria (ACTN) last week that the naira was undervalued by 11 percent.

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According to Mr Rewane, the purchasing power parity (PPP)-implied exchange rate placed the naira at approximately N1,256.79 to the dollar. He explained that while currencies might deviate in the short term, they generally adjusted towards their fundamental value over a medium-term period of around five years.

His presentation examined in detail the structural weaknesses and cyclical trends that had continued to shape Nigeria’s foreign exchange market. Mr Rewane also reminded participants that the core duty of corporate treasurers was to ensure efficient use of cash and liquid assets. He urged treasury professionals to strike a balance between optimism and caution, particularly when making decisions linked to foreign exchange (FX) exposure.