The naira strengthened modestly against the United States dollar on the first trading day of February 2026, closing at N1,384.5/$ in Nigeria’s official foreign exchange market.
Data released by the Central Bank of Nigeria (CBN) on Monday showed the local currency gained ground as the new month began, reflecting a slight improvement in market stability and a narrowing of the gap between official and parallel exchange rates.
Official Market Shows Improvement
The official FX rate on the first trading day of February 2026 was stronger than the final trading day of January, when the naira closed at N1,391/$. This marks a modest improvement for the local currency, signaling early signs of market stabilization.
The currency’s performance also contrasts sharply with the same period last year, when the naira traded much weaker. On the first trading day of February 2025, the naira closed at about N1,500/$ in the official market.
Parallel Market Gap Narrows
Data compiled by Nairametrics show the parallel market opened February 2026 with the naira trading at N1,453/$, narrowing the gap with the official rate to N62. This compares with a N68 gap recorded at the end of January.
The smaller divergence between official and parallel rates suggests improved price discovery and market alignment, a development that market watchers and policymakers typically view as positive.
A More Stable Start Compared With 2025
February 2025 saw the naira consistently trade above N1,500/$ in the official market amid heightened volatility. By contrast, the start of February 2026 indicates a relatively stronger and more stable exchange rate environment, both in official and parallel markets.
However, analysts note that demand pressures and exposure to external shocks remain key risks that could influence exchange rate movements in the near term. As a result, the narrowing market gap is being viewed with cautious optimism.
External Reserves Provide Buffer
Nigeria’s external reserves, which stood at $46.18 billion, continue to provide a crucial buffer for managing FX market fluctuations. Reports indicate that the reserves recently surpassed the $46 billion mark for the first time in about eight years, bolstering confidence in the CBN’s ability to intervene during periods of volatility.
Stronger reserves are also seen as supporting improved alignment between the official and parallel markets, particularly during periods of heightened dollar demand.