Naira Rebounds to N1,382.63 Per Dollar Amid Surge in Foreign Exchange Inflows
Nigeria's currency demonstrated renewed strength on Tuesday, March 24, 2026, providing a welcome respite in the volatile foreign exchange market. The naira appreciated at the Nigerian Foreign Exchange Market (NFEM), closing at N1,382.63 per dollar, marking a significant improvement from the N1,388.38 rate recorded just one day earlier.
Foreign Exchange Inflows Jump 45% as Investor Interest Grows
According to figures released by the Central Bank of Nigeria, the local currency gained N5.75, representing a 0.42 percent increase. This rebound was primarily supported by improved liquidity conditions, indicating a temporary easing of pressure in the official foreign exchange window.
Meanwhile, in the parallel market, the naira remained steady at N1,415 per dollar, reflecting relative calm in that segment. However, the gap between official and black market rates widened to N33 from N27, highlighting persistent inefficiencies within the broader foreign exchange system.
A key driver behind the naira's recovery has been a substantial surge in foreign exchange inflows. Data from FMDQ Group revealed that total inflows climbed 45 percent month-on-month to reach $4.4 billion in February. This marks the third consecutive monthly increase, largely fueled by strong participation from foreign portfolio investors.
According to a report by BusinessDay, these investors are increasingly positioning Nigeria as a lucrative carry trade destination, attracted by the country's high-yield environment. The influx of offshore funds has helped boost market liquidity, providing much-needed support for the naira amid rising demand for dollars.
External Reserves Continue Downward Trend Despite Positive Momentum
Despite the positive momentum in the foreign exchange market, Nigeria's external reserves continue to trend downward, underscoring the fragile balance facing policymakers. Reserves fell for the sixth straight session, declining by 0.84 percent to $49.60 billion as of March 23, 2026, down from a recent peak of $50.02 billion recorded earlier in the month.
While this drop may raise concerns, analysts caution against focusing solely on headline figures. According to a report by VNL Capital Asset Management, the underlying strength of Nigeria's reserves has improved significantly in recent years.
Net usable reserves, which represent funds readily available for immediate intervention, have surged from $3.99 billion at the end of 2023 to $34.80 billion by the close of 2025. This sharp increase highlights improved liquidity and a stronger buffer against external shocks.
Gross reserves have also remained robust, exceeding $45 billion and covering nearly 10 months of imports, well above global adequacy benchmarks.
Structural Reforms and Gold Strategy Enhance Stability
The improvement in reserve quality has been driven by a wave of structural reforms, according to a report by MarketForces Africa. These include the unification of the foreign exchange market, settlement of legacy obligations, and the removal of fuel subsidies, steps that have eased pressure on Nigeria's external accounts.
In addition, tighter monetary policy has helped curb excess demand for foreign exchange, while improved policy credibility has encouraged inflows from remittances, exports, and foreign investments.
Another notable strategy has been the Central Bank's increasing gold reserves. Gold holdings rose from approximately $2.6 billion in late 2025 to roughly $3.5 billion in the first quarter of 2026. These purchases, funded in naira through domestic mining, have strengthened reserve diversification without draining foreign exchange resources.
Naira Appreciates 4.13% in February Despite Central Bank Intervention
Earlier reports indicated that Nigeria's currency appreciated by 4.13 percent in February, defying efforts by the Central Bank of Nigeria to slow its momentum through late-month dollar purchases. A new report by the Financial Market Dealers Association shows the naira strengthened across both the official Nigerian Foreign Exchange Market and the parallel market, marking a notable shift from earlier volatility.
The apex bank reportedly stepped in toward the end of the month to mop up excess foreign exchange liquidity, a move aimed at preventing what policymakers considered an overly rapid appreciation of the currency.
