The Nigerian currency weakened to N1,391 per dollar at the official foreign exchange market, reflecting renewed pressure from a strengthening U.S. dollar and global inflation concerns.

Dollar strength drives decline

The depreciation comes as the U.S. dollar continues to gain against major global currencies, driven by investor demand for safe-haven assets amid economic uncertainty. 

Global inflation fears and geopolitical tensions have further boosted the appeal of the dollar, putting emerging market currencies like the naira under pressure.

Market volatility persists

Currency markets have remained volatile in recent weeks, with the naira fluctuating within a narrow band before weakening toward the N1,390/$ range.

Analysts note that the N1,400/$ level remains a key psychological threshold, with movements around this range often reflecting broader shifts in global financial sentiment. 

The naira’s recent performance highlights the sensitivity of Nigeria’s currency to external shocks, particularly shifts in global capital flows and monetary policy expectations.

Inflation concerns weigh on outlook

Rising global inflation expectations, partly driven by energy price volatility and geopolitical risks, have contributed to higher U.S. Treasury yields, strengthening the dollar further.

This has made it more challenging for emerging markets to maintain currency stability, as investors increasingly shift funds to safer assets.

Domestic factors still in play

Despite the external pressures, domestic factors such as foreign exchange liquidity, external reserves, and policy interventions by the Central Bank of Nigeria continue to influence the naira’s trajectory.

Recent improvements in FX supply had supported the currency in earlier sessions, but global headwinds appear to have outweighed these gains.

Outlook for the naira

Market watchers say the naira could remain under pressure in the near term if global dollar strength persists and inflation concerns remain elevated.

However, sustained policy reforms, improved FX inflows, and stable oil prices could help cushion further depreciation.

The development underscores the ongoing challenge of balancing domestic economic reforms with external market forces shaping Nigeria’s currency performance.

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The Central Bank of Nigeria (CBN) has announced that it will hold its 304th Monetary Policy Committee (MPC) meeting on February 24, 2026, as policymakers continue efforts to manage inflation, stabilise the foreign exchange market, and strengthen macroeconomic conditions.

The schedule was disclosed in an official circular published on the apex bank’s website on Monday. According to the notice, the two-day meeting will take place at the CBN headquarters in Abuja, beginning on Monday, February 23, and concluding on Tuesday, February 24.

The MPC meeting comes at a critical moment for Africa’s largest economy, as authorities balance signs of easing inflation against persistent concerns around high interest rates, currency stability, and borrowing costs for businesses and households.

The Monetary Policy Committee is the CBN’s highest decision-making body on monetary and credit policies. It determines the direction of interest rates and liquidity conditions through key instruments such as the Monetary Policy Rate (MPR), Cash Reserve Ratio (CRR), and Liquidity Ratio.

According to the circular, deliberations will focus on recent inflation trends, exchange rate developments, output growth, and broader financial system stability before policy decisions are announced at the end of the meeting.

At its last meeting in November 2025, the MPC retained the Monetary Policy Rate at 27 per cent, maintaining a tight policy stance aimed at curbing inflationary pressures and supporting the naira. The decision kept Nigeria’s benchmark interest rate at one of its highest levels in recent history, reflecting the CBN’s cautious approach to monetary easing.

The committee also retained the Cash Reserve Ratio at 45 per cent for deposit money banks and 16 per cent for merchant banks, while keeping the Liquidity Ratio unchanged at 30 per cent. These measures have continued to limit excess liquidity in the banking system, even as they increase borrowing costs across the economy.

Earlier, at its 302nd meeting in September 2025, the MPC cut the MPR by 50 basis points from 27.5 per cent to 27 per cent, signalling a tentative shift after months of aggressive tightening. However, subsequent meetings have largely favoured policy continuity amid lingering macroeconomic risks.

Recent inflation data may shape discussions at the February meeting. Figures from the National Bureau of Statistics show that Nigeria’s headline inflation eased to 15.15 per cent in December 2025, following a review of the Consumer Price Index methodology. This marked a sharp decline from the 17.33 per cent recorded in November and a significant slowdown compared with the 34.80 per cent recorded in December 2024.

Despite the improvement, the CBN has repeatedly stressed that sustained price stability, rather than short-term moderation, will guide its policy decisions. Analysts note that while easing inflation could open the door for gradual policy adjustments, concerns around exchange rate volatility and capital flows may keep the apex bank cautious.

The upcoming MPC meeting is expected to attract close attention from investors, financial markets, and businesses, as any shift in policy stance could influence lending rates, investment decisions, and overall economic sentiment.

Market watchers will also be looking for guidance on the CBN’s outlook for 2026, particularly as the government pursues broader economic reforms aimed at restoring growth and investor confidence.

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The naira weakened further against the United States dollar on Wednesday, reflecting continued pressure across both the official and parallel foreign exchange markets.

At the parallel market, the local currency depreciated to about ₦1,490 per dollar, compared with ₦1,470 recorded the previous day. The latest movement highlights sustained demand for foreign exchange amid limited dollar supply in the informal market.

The naira also recorded a mild decline at the Nigerian Foreign Exchange Market (NFEM), where it closed at ₦1,421 per dollar. This represents a ₦5 depreciation from the ₦1,416 exchange rate recorded on Tuesday, according to data published by the Central Bank of Nigeria (CBN).

As a result of the contrasting rates, the spread between the parallel market and the official window widened to ₦69 per dollar, up from ₦54 the previous day. Market watchers say the growing gap reflects persistent distortions in dollar supply and demand across the foreign exchange ecosystem.

Currency analysts note that the pressure on the naira is being driven by a combination of factors, including strong import demand, speculative activity, and cautious dollar inflows. While recent policy measures by the monetary authorities have helped improve transparency at the official window, challenges remain in stabilising the currency across all segments of the market.

The naira’s performance continues to be closely watched by businesses and investors, particularly as exchange rate movements have direct implications for inflation, import costs and overall economic confidence.

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Nigeria’s external reserves have recorded a notable increase of $540.28 million in just two weeks, rising to $43.17 billion as of October 30, 2025, according to data from the Central Bank of Nigeria (CBN).

The uptick marks one of the most significant short-term gains in recent months and reflects improved foreign exchange inflows, stronger oil export receipts, and a consistent rise in diaspora remittances.

Financial analysts attribute the growth to sustained crude oil prices above the $90 per barrel mark, renewed foreign investment inflows, and the CBN’s foreign exchange reforms aimed at strengthening market confidence and stabilizing the naira.

Experts say the increase in reserves enhances Nigeria’s external position, providing a buffer against currency volatility and boosting the country’s credit outlook among international investors.

Recent reports by United Capital Research also confirmed the positive trend, noting that Nigeria’s reserves previously at $42.53 billion as of September 30, 2025 have reached their highest level in more than three years.

The firm added that with steady oil production, effective fiscal management, and continued inflow of remittances, Nigeria’s external reserves are expected to maintain a steady rise into early 2026.

Economic observers believe the growing reserves could strengthen Nigeria’s ability to meet external obligations, support trade balance, and reinforce the Central Bank’s ongoing monetary stability efforts.

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Nigeria has attracted over $8 billion in new energy investments, signaling renewed investor confidence driven by economic reforms and improved security, according to Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso.

Speaking after the IMF/World Bank Annual Meetings, Cardoso said policy measures such as the unification of the foreign exchange market, monetary tightening, and fiscal discipline are helping stabilize the economy and restore investor trust. He noted that lower insecurity in oil-producing areas and targeted incentives have boosted production and investment inflows.

Cardoso urged consistency in policy execution, warning against “reform fatigue.” He stressed that sustained reforms are essential for lasting growth and for citizens to feel the benefits of economic recovery.

He also highlighted the CBN’s collaboration with fintech operators to foster innovation and inclusive growth. “We are working closely with fintech to address challenges and promote long-term stability in the sector,” he said.

Cardoso described Nigeria’s economy as entering a new phase of growth, noting improvements in inflation, exchange rate stability, and GDP performance. “The economy is stable, and growth has improved from 3% to 4%. We’re on the right track, but we must stay committed,” he added.

He further announced that Nigeria will chair the G-24 group of developing nations from November 1, 2025, enhancing its influence in shaping global economic policies.

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