Nigeria’s naira is on track for its strongest annual gain since at least 2018, shrugging off the political risks typically associated with an election season as higher oil prices and stronger remittance inflows boost dollar liquidity, analysts say.
The currency is forecast to strengthen to $1,290 by year-end from $1,328.92, according to the average estimate of four investment banks. That would extend its eight per cent gain so far this year to almost 12 per cent, marking its best annual performance in at least eight years.
According to projections compiled from major investment firms, the naira is expected to settle between $1,200 and $1,350 per dollar by year-end.
Investment firm CardinalStone expects the naira to hover around 1,310 per dollar, while investment management firm Zedcrest Capital projects a rate of approximately 1,300 per dollar.
Financial services firm Cordros Securities provides a broader range, forecasting the currency to trade between 1,250 and 1,350 per dollar. Meanwhile, financial advisory firm MDU Capital offers the most optimistic outlook, predicting a range between 1,200 and 1,300 per dollar.
Forecaster Year-End Naira Projection (per US Dollar)
CardinalStone Around 1,310
Zedcrest Capital Around 1,300
Cordros Securities 1,250 – 1,350
MDU Capital 1,200 – 1,300
Forecaster Year-End Naira Projection (per US Dollar)
CardinalStone Around 1,310
Zedcrest Capital Around 1,300
Cordros Securities 1,250 – 1,350
MDU Capital 1,200 – 1,300
These projections suggest growing analyst confidence in the effectiveness of foreign exchange management strategies, with market participants expecting reduced volatility in the local currency market through the remainder of the year.
Meanwhile, the naira closed at N1,315.67 in the official foreign exchange (FX) market on Thursday amid increased dollar liquidity, as external reserves reached an 18-year high of $53.99 billion.
Data published by the CBN showed that the naira appreciated by N11.02, with the dollar quoted at N1,315.67, representing a 0.84 percent gain from the N1,326.69 quoted on Wednesday at the Nigerian Foreign Exchange Market (NFEM).
In the parallel market, also known as the black market, the local currency steadied at N1,400 per dollar on Thursday. The gap between the official and parallel market rates widened to 6.46 percent from 4.63 percent previously.
Total turnover at the interbank segment of the FX market surged by 62.33 percent to $152.04 million on Thursday, from $93.66 million recorded on Wednesday. The number of deals also increased by 45.71 percent, from 105 on Wednesday to 153 deals on Thursday.
Nigeria’s external reserves, which give the CBN the firepower to defend the naira and meet external obligations, have maintained a steady growth trajectory, rising to an 18-year high of $53.99 billion as of September 2, 2026.
The naira appreciated by 1.5 percent in the NFEM during August, while market turnover rose to $14.68 billion, its highest level in five months, indicating stronger activity and liquidity in the official market, according to a report by FMDA.
Nigeria also recorded $947 million in remittance inflows through International Money Transfer Operators (IMTOs) in July 2026, the highest monthly inflow ever recorded through formal channels and approaching the $1 billion monthly target set by Central Bank of Nigeria (CBN) Governor Olayemi Cardoso.
IMTO inflows reached $3.8 billion in the first seven months of 2026, representing a 50.2 percent increase from the same period in 2025.
The stronger inflows reflect the impact of CBN reforms aimed at making formal remittance channels more competitive, transparent and accessible, including reforms to the IMTO regulatory framework, the introduction of the Non-Resident Bank Verification Number and closer engagement with IMTOs, banks and Nigerian diaspora communities.
More recently, the CBN strengthened requirements for remittance transactions to be routed through designated settlement accounts with authorised dealer banks.
‘When we set a clear ambition to reach $1 billion a month in remittance inflows through formal channels nearly two years ago, some people thought we were dreaming. At $947 million in July, we are now approaching that milestone,’ Cardoso said.
The increase in formal remittances is significant for the foreign exchange market because stronger diaspora inflows increase dollar supply, improve market transparency and strengthen Nigeria’s external financing position.
Cardoso said the CBN’s focus was not on a single month but on creating conditions for sustained growth in formal remittances.
‘July is an important marker, but our focus is not on a single month. It is on creating the conditions for sustained growth in formal remittances. We expect to keep seeing improvement and believe Nigeria can reach and ultimately sustain monthly inflows above $1 billion,’ he said.
Higher oil prices are also providing support for the external sector. Average Brent crude prices rose by 5 percent to $87.26 per barrel in August, although prices moved above $90 per barrel at points amid geopolitical tensions in the Middle East.
The stronger external position has coincided with improving domestic liquidity. System liquidity rose by 56.17 percent to N4.65 trillion in August from N2.98 trillion in July, driven by maturing securities, FAAC allocations and other repayments that more than offset the CBN’s liquidity mop-up operations.
However, the strengthening of the naira in the official market is increasingly diverging from movements in the parallel market.
The premium between the NFEM and parallel market widened further in August, reflecting the faster pace of naira appreciation in the official market. The naira gained 1.5 percent in NFEM during the month, compared with only 0.06 percent movement in the parallel market.
Analysts have linked the widening premium partly to the possible emergence of pre-election foreign exchange demand pressures, as increased political activity typically raises demand for dollars.
Dollarisation of real estate transactions may also be sustaining structural demand for foreign exchange, particularly as uncertainties around Capital Gains Tax encourage some sellers to price assets in dollars.
The CBN’s challenge now is to ensure that improving foreign exchange liquidity translates into a durable strengthening of the naira without creating excessive domestic liquidity that could undermine monetary stability.