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Economic analysts and Bureau De Change (BDC) operators are increasingly optimistic about the naira’s outlook in 2026, citing stronger foreign exchange inflows, sustained monetary tightening, and gradual structural reforms as key drivers of improved stability.
Market participants who spoke with Nairametrics said recent developments in Nigeria’s foreign exchange market suggest that demand–supply dynamics are beginning to rebalance, reducing the extreme volatility that characterised previous years.
Improving confidence reshapes FX dynamics
According to analysts, restoring confidence in the FX market has been central to the naira’s renewed resilience. Increased transparency, better price discovery, and declining speculative activity are helping stabilise exchange rate movements.
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They also point to stronger external reserves and improving inflows from exports, remittances, and portfolio investments as factors supporting the currency’s position going into 2026.
With confidence returning, market watchers believe the risk of sharp, disorderly depreciation has diminished considerably.
Exchange rate outlook: Stability over shocks
Dr Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), said the likelihood of major naira instability remains low under current conditions.
He projected that the exchange rate could trade largely within the ₦1,400–₦1,500 per dollar range for most of 2026, barring major external shocks.
Dr Yusuf also commended the Central Bank of Nigeria (CBN) for its improved liquidity management, noting that the reduced dependence on Ways and Means financing has helped prevent excess liquidity from distorting the monetary environment.
“The CBN is managing liquidity very well. We are not seeing the risk of Ways and Means financing resurfacing and distorting the liquidity situation,” he said.
Broader market expectations
Other forecasts align with this cautiously optimistic view. In its 2026 macroeconomic outlook, CardinalStone projected that the naira could strengthen to between ₦1,350 and ₦1,450 per dollar this year, supported by tighter monetary policy and improved FX inflows.
Despite the positive outlook, the naira began the year on a slightly weaker note, trading at ₦1,431 per dollar at the official foreign exchange market on the first trading day of 2026, according to Nairametrics.
What you should know
Nigeria’s exchange rate has experienced significant volatility in recent years following FX market reforms and currency devaluations. Analysts say the current phase reflects a transition toward greater market discipline, where stability is driven less by controls and more by improved fundamentals.
If current policies are sustained, experts believe 2026 could mark a turning point toward a more predictable and confidence-driven FX environment.
