The Nigerian Foreign Exchange Market (NFEM) began the first week of March 2026 with the British Pound exhibiting modest movements against the Nigerian Naira, signaling a market that is carefully adjusting to the Central Bank of Nigeria’s (CBN) recent monetary policy recalibration. Analysts note that investors and traders are weighing the effects of the apex bank’s latest 50-basis-point cut to the Monetary Policy Rate (MPR), which now stands at 26.5%, in the context of ongoing disinflation and robust foreign reserves.

Official Market Performance

Data from the official window indicate that the Naira opened at 1,826.51 per Pound. Early trading showed slight volatility, with the rate peaking at 1,828.14 before moderating to 1,825.26 by mid-morning.

Market observers attribute this relative stability to the CBN’s recent decision to ease monetary policy on February 24. The rate cut reflects confidence in the persistent disinflationary trend and has encouraged a steady flow of liquidity into the official market, preventing the sharp Sterling surges that often characterize the start of a new month.

Parallel Market Trends

In the parallel market, the Pound is exchanging between 1,842 and 1,855 per Naira. Although the premium over the official rate remains, the spread has narrowed to roughly 1.2%, near historic lows. This convergence is seen as an indicator of improved market confidence and the effectiveness of foreign exchange interventions by the CBN.

Traders in Lagos and Abuja report that while demand for Pounds—largely driven by international travel, tuition, and cross-border business—remains steady, speculative pressures have eased. Greater access to foreign currency through official channels has reduced reliance on informal sources, making the black-market less attractive for bulk transactions.

Underlying Macroeconomic Drivers

Several domestic factors continue to shape the Pound-to-Naira trajectory:

  • Record External Reserves: Nigeria’s foreign reserves have surged to a 13-year high of $50.45 billion, providing the central bank with a significant buffer to maintain stability in the FX market.
  • Sustained Disinflation: Headline inflation slowed for the tenth consecutive month, falling to 15.10% in January. This trend has bolstered the Naira’s real purchasing power against major global currencies.
  • Steady Oil Production: With crude output averaging 1.46 million barrels per day, Nigeria maintains a reliable inflow of foreign exchange, supporting the NFEM’s “willing-buyer-willing-seller” model.
  • High-Yield Environment: Despite the MPR reduction, interest rates remain relatively high, continuing to attract foreign portfolio investors seeking Naira stability.

Outlook

Market analysts expect the Pound to trade within a narrow band of 1,820 to 1,835 in the official window for the rest of the week, assuming the CBN sustains its current intervention strategy and liquidity provisions. With external reserves at comfortable levels and inflation trending downward, the Naira appears to be entering a phase of measured stability, offering a more predictable environment for both importers and investors.