Naira breaks ₦1,800/£ as currency rally gathers pace

The Nigerian currency, Naira, on Wednesday strengthened against the Pound to ₦1,789/£ as improved foreign-exchange conditions and stronger domestic fundamentals continue to support the currency.

The latest move represents a notable shift from the start of September, when the pound was trading above ₦1,800. Central Bank of Nigeria (CBN) showed the official rate at about ₦1,789.18/£ on September 8, compared with ₦1,799.50 on September 1.

Independent market data, however, showed sterling at about ₦1,791.47 on September 9, after touching an intraday low of ₦1,788.35, confirming that the currency pair has remained below the ₦1,800 threshold.

The appreciation comes against a broader improvement in Nigeria’s external position. Gross external reserves rose to $54.08 billion by September 3, the highest level since December 2008, while the naira has also strengthened to around ₦1,320/$ in the official market.

The stronger external buffer is providing greater confidence in Nigeria’s ability to meet foreign-exchange obligations, while tighter monetary conditions and relatively attractive yields on naira assets continue to support demand for domestic securities.

The CBN has maintained a tight monetary stance, with the Monetary Policy Rate (MPR) at 26.5 per cent, helping to keep naira-denominated assets attractive to investors seeking higher yields.

Foreign capital inflows, stronger oil receipts and improved foreign-exchange market liquidity can also increase the supply of major currencies and ease pressure on the naira.

The relationship with sterling is particularly important because the pound’s value against the US dollar also influences the naira-sterling exchange rate.

Sterling was recently trading around $1.35, having recovered from a three-week low, as investors assessed UK monetary policy, fiscal conditions and the impact of higher global energy prices.

The Bank of England’s policy outlook remains an important variable for the pound. A prolonged period of relatively high UK interest rates could support sterling, while weaker economic growth or expectations of rate cuts could limit its strength.

For Nigeria, however, the bigger question is whether the naira’s gains are being supported by durable improvements in dollar liquidity and reserves rather than short-term market positioning.

The recent move below ₦1,800/£ has immediate implications for Nigerians with sterling-denominated expenses. Students paying overseas tuition, travellers, importers and businesses settling UK-related obligations now require fewer naira to purchase pounds than they did at the beginning of the month.

Market traders are also watching the ₦1,800 level closely. September data show the pair falling from ₦1,812.47 on September 1 to about ₦1,789 by September 8, a decline of more than 1.2 per cent in just a week.

A sustained break below the level could strengthen expectations of further naira gains, although the pair’s recent movement also shows that reversals remain possible.

The improved currency position is being reinforced by Nigeria’s stronger external accounts. Rising reserves, increased oil production and stronger formal foreign-exchange inflows have provided a wider cushion for the naira, while reforms to the FX market have improved price discovery.

Still, the economy remains heavily dependent on oil earnings, leaving the currency exposed to changes in crude production, global energy prices and capital flows.

The latest sterling movement therefore represents more than a technical breach of ₦1,800/£. It is another indication that the naira’s external position has strengthened materially in 2026.

The real test will be whether that improvement can be sustained through stronger non-oil exports, stable reserve accumulation and deeper foreign-exchange liquidity, rather than another temporary rally.