Naira Gains Ground as Foreign Inflows Strengthen FX Market

LAGOS — The Nigerian naira made modest gains against the US dollar this week as improved foreign capital inflows and the positive market sentiment from the T+1 settlement launch supported the currency. Vanguard market data showed the naira trading at approximately N1,368 per dollar in the official market on Friday, a slight improvement from the N1,373 levels earlier in the week.

The Q1 2026 capital importation surge of 83 percent to $10.37 billion, reported this week by the NBS, provided a strong signal to market participants that Nigeria’s improved economic fundamentals are translating into real foreign investor interest. This expectation of sustained inflows is supporting the naira’s gradual strengthening.

Currency analysts said the naira’s direction heading into the second quarter of 2026 is more positive than at any point in the previous 18 months. The combination of strong reserves, S&P upgrade, improved oil production, and reduced fuel import costs is creating structural support for the currency.

Risks Ahead

Despite the positive trajectory, significant risks remain. Nigeria’s 2026 budget deficit of N23 to 24 trillion requires heavy government borrowing that could fuel inflation and currency pressure. The approaching 2027 election season typically sees increased government spending that adds monetary pressure.

The CBN said it remains vigilant and will intervene as necessary to prevent excessive volatility. Governor Cardoso said the bank’s priority is a stable and competitive exchange rate that supports both import affordability and export competitiveness. He said the bank will not allow the naira to become significantly overvalued even as inflows improve.

For ordinary Nigerians, the naira’s gradual strengthening has yet to translate into noticeable relief from high prices. Food inflation remains elevated. Imported goods are still expensive. Economists said the pass-through from currency improvement to consumer prices typically takes six to twelve months.