The British Pound maintained a steady but slightly elevated position against the Nigerian Naira as the first full trading week of March 2026 came to a close, reflecting a foreign exchange market that analysts say is experiencing a period of relative stability.
Real-time data from the Nigerian Foreign Exchange Market (NFEM) and informal trading channels on Friday, March 6, indicate that the Naira is navigating the market with modest fluctuations, supported by Nigeria’s strongest external reserves position in more than a decade.
Official market performance
In the official NFEM window, the Naira opened the day at approximately 1,850.30 per Pound Sterling. During early trading hours, the exchange rate experienced minor volatility, briefly rising to around 1,852.32 before settling back to about 1,850.29 by 6:00 a.m. West African Time.
Market observers note that the relatively stable movement reflects growing transparency under the “willing-buyer, willing-seller” foreign exchange framework currently guiding the market.
Although the Naira recorded a slight week-on-week weakening against the Pound, liquidity within the official market remains robust. Authorized dealers say the Central Bank of Nigeria (CBN) continues to prioritise the clearance of legitimate foreign exchange demands, a policy that has helped stabilise the official rate and prevent the sharp volatility seen in previous years.
Parallel market trends
In the parallel market, often referred to as the black market, the Pound Sterling was traded between 1,865 and 1,878 Naira.
This places the gap between official and informal market rates at roughly 1.2 to 1.5 per cent, indicating a relatively narrow spread compared with earlier periods when the difference between both markets was significantly wider.
Currency traders operating in key financial centres such as Lagos and Abuja report steady demand toward the end of the trading week, largely driven by personal travel needs and academic remittances abroad.
However, traders say there is little evidence of speculative panic buying. Analysts attribute the closer alignment between the two markets partly to improved foreign exchange supply to Bureau De Change operators, which has expanded access to foreign currency for small-scale users and reduced pressure on the parallel market.
Key economic drivers
Several macroeconomic factors are influencing the exchange rate trajectory.
One of the most significant developments is the rise in Nigeria’s external reserves. The country’s gross foreign reserves reached approximately 50.45 billion dollars during the week, marking a 13-year high. This level of reserves provides nearly 10 months of import cover, strengthening the ability of the Central Bank of Nigeria to defend the Naira and respond to potential liquidity shocks.
Another factor supporting the currency is the continued slowdown in inflation. Headline inflation has declined for ten consecutive months, falling to about 15.10 per cent in the most recent report. The easing in price growth—particularly in food prices—has helped strengthen the real value of the Naira while improving investor sentiment toward the Nigerian economy.
Monetary policy developments have also influenced market expectations. Following a 50-basis-point reduction in the Monetary Policy Rate to 26.5 per cent late last month, the market is currently adjusting to the new interest-rate environment. Although lower interest rates can sometimes weaken a currency, analysts say the rate cut is largely being interpreted as a signal of improving macroeconomic stability.
Additionally, increased domestic refining capacity is easing pressure on the foreign exchange market. Higher local production of refined petroleum products has significantly reduced Nigeria’s reliance on fuel imports, historically one of the largest drivers of foreign currency demand.
Market outlook
Financial analysts expect the Pound-to-Naira exchange rate to remain within a relatively narrow range of about 1,845 to 1,860 in the official market for the remainder of the trading day.
As the first quarter of 2026 progresses, market watchers say attention will remain focused on the continued build-up of external reserves and the impact of stabilisation policies implemented by the Central Bank of Nigeria to sustain foreign exchange market stability.