Nigeria’s naira is expected to remain relatively stable this year after recording its strongest performance in more than a decade in 2025, offering signs that recent economic and foreign exchange reforms are beginning to deliver results.
In its latest economic outlook, financial services firm CardinalStone projected that the naira could trade within a range of ₦1,350 to ₦1,450 per US dollar in 2026, citing strengthening macroeconomic fundamentals.
According to the report, improved liquidity in the foreign exchange market, coupled with rising external reserves, is supporting the currency’s outlook. Nigeria’s reserves are now at a more than seven-year high and are sufficient to cover about 6.2 months of current external debt obligations, a level well above the average for many African economies.
CardinalStone also pointed to easing inflation, a record-high current account surplus in 2025, and sustained foreign capital inflows as key factors underpinning the naira’s resilience. Increased transparency in the FX market, driven by recent policy reforms, has further strengthened investor confidence.
The outlook follows a notable turnaround in the currency’s performance. The naira gained about 7.5 per cent in 2025, reversing steep declines of 41.4 per cent in 2024 and 48.9 per cent in 2023, which followed the government’s decision to liberalise the foreign exchange regime.
Nigeria relaxed its currency controls and devalued the naira in June 2023, leading to a sharp initial loss in value. However, the move helped attract much-needed foreign exchange inflows, restored market confidence, and pushed the country’s current account into surplus.
To stabilise the market, the Central Bank of Nigeria introduced several reforms, including the Electronic Foreign Exchange Matching System (EFEMS), aimed at improving transparency and efficiency. These measures helped narrow the gap between official and parallel market rates to about 2.11 per cent in 2025, down from over 62 per cent before the reforms.
Market liquidity has also improved, with average daily FX turnover across spot and forward markets rising to $421.4 million, representing a more than 59 per cent increase from the previous year.
Despite the positive outlook, CardinalStone cautioned that risks remain. Political uncertainty ahead of elections, weaker export performance, declining oil prices, and rising external debt could weigh on investor sentiment and limit further gains in the naira.
