Naira Exhibits Divergent Trends Across Foreign Exchange Markets
The Nigerian currency demonstrated a mixed performance in the official and unofficial foreign exchange markets on Wednesday, February 18, 2026. While the naira strengthened at commercial banks and in the parallel market, it experienced a slight depreciation in the official Nigerian Foreign Exchange Market (NAFEM) window against major global currencies.
Bank and Parallel Market Gains Contrast with Official Market Decline
At GTBank's foreign exchange counter, the naira gained N16 against the U.S. dollar, closing at N1,347/$1 compared to N1,363/$1 the previous trading day. In the parallel market, commonly referred to as the black market, the currency strengthened by N20 to N1,370/$1 from Tuesday's rate of N1,390/$1.
However, the Central Bank of Nigeria reported that on the official NAFEM window, the naira depreciated slightly by N2.15, representing a 0.16% decline, to N1,338.11/$1 from N1,335.96/$1. Against other major currencies, the naira fell by N10.27 to N1,817.02/£1 and by N5.88 to N1,585.12/€1.
External Reserves Surge Provides Monetary Policy Support
Market analysts have attributed the relative stability in currency markets to Nigeria's rising external reserves, which climbed above $48.5 billion as of February 17. This significant reserve accumulation provides the Central Bank of Nigeria with enhanced capacity to support the national currency and narrow the persistent gap between official and parallel market exchange rates.
The difference between the official and black market exchange rates has reduced substantially to approximately N32 from the N92 differential recorded just one week earlier. This narrowing spread indicates improved market convergence and suggests more effective monetary policy implementation.
BDC Operators Await Implementation of New Guidelines
Despite these positive developments, Bureau De Change (BDC) operators have not yet resumed dollar purchases from commercial banks, one week after the Central Bank reopened the Nigerian Foreign Exchange Market to their participation. Under new regulatory guidelines, licensed BDC operators may purchase foreign exchange through authorized dealer banks up to a maximum of $150,000 per week, subject to strict compliance requirements.
The central bank has implemented additional measures to enhance market transparency, including capping cash settlements at 25% of total transaction values to discourage cash-based foreign exchange dealings in the retail market. BDC operators are also required to resell any unutilized foreign exchange within 24 hours of acquisition.
Industry Leader Highlights Market Benefits
Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria, commented on the new Central Bank directives in a recent interview. He emphasized that the measures would increase dollar liquidity at the critical retail end of the market and provide BDC operators with a reliable source of foreign currency.
"The new directives will usher in positive market sentiment and boost investor confidence in the subsector and Nigeria's financial industry," Gwadabe stated. "I also want to use this medium to call on our members to ensure strict compliance with all prudential and anti-money laundering obligations. Above all, these measures will enhance transparency, accountability, and price discovery in the foreign exchange market."
Regional Currency Integration Progresses
In related monetary policy developments, the Central Bank of Nigeria has joined other West African central banks in advancing plans to launch a single regional currency, the Eco, by 2027. The proposed currency would be modeled after the euro system adopted by the European Union.
Governors from twelve member states of the Economic Community of West African States (ECOWAS) are currently aligning technical, fiscal, and monetary frameworks required to operationalize this long-delayed regional currency project. This initiative represents a significant step toward greater economic integration across West Africa.
The mixed performance of the naira across different market segments highlights the complex dynamics of Nigeria's foreign exchange environment. While external reserve accumulation provides important support for currency stability, market participants continue to navigate evolving regulatory frameworks and regional monetary integration initiatives.
