The Nigerian naira has continued its upward march against the United States dollar, strengthening further during the midweek trading session to settle at N1,394 per dollar, marking one of its strongest performances in recent times and breaking decisively below the psychological N1,400 threshold.
The latest appreciation reflects growing optimism in Nigeria’s foreign exchange market, driven by a combination of improving macroeconomic indicators at home and mounting pressure on the US dollar globally. On Tuesday, the naira had already signalled renewed strength after closing at N1,400.66/$ in the Nigerian Foreign Exchange Market (NFEM), its highest level in weeks. That momentum carried into Wednesday’s session, when the local currency advanced further to N1,394/$, representing a notable gain over its previous close of N1,401.2/$.
According to DDM NEWS market monitoring, the naira’s sustained rally has been one of the most consistent currency stories of early 2026, extending a recovery trend that gathered pace throughout 2025. Analysts note that while the appreciation has been gradual, its persistence suggests a deeper structural shift rather than a short-lived speculative spike.
The official market’s sharp gains were mirrored, albeit more cautiously, in the parallel market, commonly referred to as the black market. Dealers in the informal segment reported only modest movements compared to the official rate, indicating a calmer response and reduced panic trading. Although a gap still exists between the official and parallel rates, analysts say the premium has narrowed significantly compared to periods of extreme naira volatility witnessed in previous years.
Currency experts observing developments told DDM NEWS that the reduced spread between the two markets is an encouraging sign, suggesting improved confidence in official pricing mechanisms and better alignment of supply and demand conditions. “The gap hasn’t disappeared, but it’s no longer widening aggressively, which is a positive signal for stability,” one Lagos-based financial analyst noted.
A key factor underpinning the naira’s recent strength is Nigeria’s improving external reserve position. Data released earlier this week show that the country’s foreign reserves climbed to $46.04 billion as of January 26, 2026, providing stronger buffers for the Central Bank of Nigeria (CBN) to meet legitimate foreign exchange demand and manage market liquidity. The steady rise in reserves has bolstered investor confidence and reassured market participants about Nigeria’s ability to withstand external shocks.
DDM NEWS reports that the naira has now recorded gains across multiple consecutive trading sessions, reinforcing the view that the currency has entered a more stable phase after years of sharp depreciation and volatility. This stability has been further supported by tighter monetary controls, improved transparency in FX allocations, and renewed interest from foreign portfolio investors.
Beyond domestic factors, global currency dynamics are also playing a significant role. The US dollar has come under increasing pressure in international markets, with analysts pointing to uncertainty surrounding US economic policy and leadership signals. Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory organisations, recently warned that the dominance of the US dollar is beginning to weaken.
“The dollar’s supremacy is cracking, and markets are building an escape route,” Green said in a widely circulated report monitored by DDM NEWS. His comments come amid a broad-based sell-off of the dollar, triggered by concerns over erratic policymaking and mixed economic signals from Washington.
Those concerns intensified after US President Donald Trump publicly downplayed the significance of the dollar’s recent sharp declines, stating that he was not worried by the currency’s dramatic falls. Currency markets, however, interpreted the remarks differently, with traders reacting nervously to what they perceive as policy unpredictability. The resulting uncertainty has pushed investors to reassess their exposure to the dollar and explore alternative currencies and assets.
For emerging market currencies like the naira, this global shift has created a window of opportunity. With the dollar weakening and capital flows seeking better yields, Nigeria’s improving fundamentals have made the naira more attractive than it has been in years. Analysts told DDM NEWS that while Nigeria is not immune to global shocks, the current environment has clearly worked in its favour.
The naira’s performance in early 2026 builds on what was already a remarkable year in 2025, when the currency recorded a decade-high performance of between 7 and 9 percent against the US dollar. That recovery marked a turning point after years of sustained pressure caused by declining oil revenues, FX backlogs, and confidence issues.
Market watchers caution, however, that sustaining the gains will require continued policy discipline. While the recent appreciation has been welcomed by businesses and consumers alike, experts warn that complacency could reverse the trend. “The naira’s strength must be supported by consistent reforms, export growth, and prudent reserve management,” a senior economist told DDM NEWS.
Importers have particularly welcomed the stronger currency, noting that it could help ease inflationary pressures by reducing the cost of imported goods. Manufacturers, on the other hand, are watching closely to see whether FX availability continues to improve, as access remains as important as pricing.
Despite these cautious notes, sentiment around the naira remains largely positive. Traders say the market mood has shifted from survival to cautious optimism, with fewer panic-driven transactions and more orderly price discovery. This change in behaviour, analysts argue, is just as important as the numerical gains recorded on trading screens.
As Nigeria navigates the evolving global financial landscape, the naira’s recent appreciation stands out as a rare bright spot. While challenges remain, the combination of rising reserves, improving market confidence, and a weakening US dollar has, at least for now, given Africa’s largest economy some much-needed breathing room.
DDM NEWS will continue to monitor developments in the foreign exchange market and provide updates on how global and domestic factors shape the trajectory of the naira in the weeks ahead.
