The Nigerian Naira remained relatively stable against the United States Dollar in the official market as the first quarter of 2026 came to a close, despite growing pressure on the nation’s external reserves.
Official Market Performance (NFEM)
At the Nigerian Foreign Exchange Market (NFEM), the Naira began trading on Tuesday, March 31, 2026, at ₦1,385.60 per Dollar. Early trading data showed a slight appreciation, with the rate strengthening to ₦1,383.37 by mid-morning. This reflects a modest gain as the currency steadies after earlier volatility within the month.
The stability recorded in the official market has been supported by the Central Bank of Nigeria’s (CBN) enhanced Electronic Foreign Exchange Matching System (EFEMS), which has improved price transparency. However, traders remain cautious amid shifting capital flows and increased corporate demand at the end of the quarter.
Parallel Market Trends
In the parallel market, the Naira also maintained a stable trajectory, reflecting trends in the official segment. Traders across key cities such as Lagos and Abuja quoted the Dollar between ₦1,405 and ₦1,420. The gap between the official and parallel market rates remains narrow, ranging from about ₦22 to ₦35, indicating progress in the CBN’s efforts to harmonise exchange rates.
Analysts noted that the recent directive mandating International Money Transfer Operators (IMTOs) to channel remittances through Naira settlement accounts is beginning to shape market sentiment. Although the policy will take full effect in May, its announcement has already reduced speculative activities in the parallel market.
Economic Backdrop and Reserve Pressures
Despite the relative exchange rate stability, Nigeria’s external reserves have come under renewed strain. The reserves declined by about $547 million over the past two weeks, dropping from $50.03 billion on March 11 to $49.48 billion by the end of the month. This decline has been linked to ongoing market interventions and external debt servicing.
Nonetheless, several macroeconomic indicators remain encouraging:
Inflation: Headline inflation eased for the 11th consecutive month, reaching 15.06% in February, its lowest level since late 2020.
Oil Revenue: Global crude oil prices remain strong, with Bonny Light trading around $103.69 per barrel. Although output stands at 1.46 million barrels per day—below the OPEC quota—the elevated prices continue to support government revenue.
Policy Shifts: The CBN recently removed restrictions on international oil companies, allowing full repatriation of export proceeds. This is expected to improve capital flows and boost investor confidence over time.
Market Outlook
As the second quarter of 2026 begins, attention will focus on whether the current level of stability can be sustained amid declining reserves. Market participants expect the Naira to trade within the ₦1,380 to ₦1,400 range in the near term, provided inflows from key sectors such as services and manufacturing remain steady.