The naira appreciated by 0.28 per cent in September, closing the month at ₦1,329.16 per dollar in the Nigerian Foreign Exchange Market. That compared with ₦1,332.94 at the end of August. In the parallel market, the currency strengthened by 1.47 per cent, closing at ₦1,360 per dollar from ₦1,380 previously. The gap between the official and parallel rates narrowed to ₦29, or 2.18 per cent, from ₦50, or 3.76 per cent, on Friday.
The immediate catalyst is the external reserves. Nigeria’s gross reserves rose to $54.95 billion as of 2 October, a 29.57 per cent increase from $42.41 billion a year earlier. The reserves have maintained a steady growth trajectory, giving the Central Bank the firepower to defend the naira and meet external obligations. The current account surplus increased to $7.54 billion in the second quarter of 2026, above earlier projections of $6.12 billion. The trade surplus strengthened from $5.45 billion in the first quarter to $9.22 billion in the second. Remittances rose from $5.28 billion to $5.49 billion over the same period.
Average Brent crude prices rose 14.43 per cent to $99.95 per barrel as geopolitical tensions in the Middle East heightened concerns over global oil supply. Higher oil prices translate into stronger dollar inflows for Nigeria, supporting both the reserves and the naira.
This mirrors the pattern of naira strength that followed the 2016 recession, when higher oil prices and a more flexible exchange rate regime stabilised the currency. The difference now is the reserve level. At $54.95 billion, Nigeria has more firepower than it did in 2016, when reserves hovered around $25 billion. The cushion is real.
But the appreciation is modest and fragile. The naira traded almost flat on a day-on-day basis, weakening slightly by 0.12 per cent to ₦1,331.69 on Monday. Activity moderated as total turnover at the interbank segment declined by 53.17 per cent to $72.12 million from $154.02 million on Friday. The Dangote IPO may have contributed marginally through increased investor interest and pre-positioning flows, though its direct impact on FX liquidity remained limited.
The structural pressures remain. Nigeria’s external reserves are growing, but so is the debt servicing obligation. External debt climbed from $42.49 billion in December 2023 to $54.52 billion by June 2026. Every dollar that flows in from oil exports and remittances is matched by dollars flowing out for debt service and capital imports. The naira’s appreciation is a function of inflows exceeding outflows. If oil prices fall or the Middle East conflict de-escalates, the margin narrows.
Winners and Losers
Winners: Importers, who face lower costs for dollar-denominated goods. The CBN, which gains credibility from a stronger naira and higher reserves. Foreign portfolio investors, who benefit from a more stable exchange rate. Travellers and businesses sourcing FX, who face a narrower premium between official and parallel rates.
Losers: Exporters, who receive fewer naira for dollar-denominated sales. Bureau de change operators, whose spreads narrow as the premium shrinks. Consumers, who may not see immediate price reductions as imported goods remain expensive due to other cost pressures.
Bottom Line: $54.95 billion in reserves is a milestone. It is not a solution. The naira is stable because oil is expensive and inflows are strong. The test is what happens when either changes.