Naira shields Nigeria from Africa-wide currency shock as FX buffers strengthen
The naira has emerged as one of Africa’s more resilient currencies in 2026, limiting its losses during the second-quarter wave of exchange-rate pressure and subsequently recovering some of the ground lost as stronger oil earnings and improved foreign exchange buffers supported Nigeria’s external position.
The World Bank’s October 2026 Africa Economic Update found that the naira’s maximum depreciation between March and June was 2.6 per cent, significantly lower than the losses recorded by several African currencies during the same period. Ghana’s cedi fell by as much as 10 per cent, while currencies in South Africa, Lesotho, Namibia and Eswatini weakened by up to 7.2 per cent. The Democratic Republic of Congo and Uganda recorded maximum declines of 6 per cent and 5 per cent respectively.
By August, the naira had recovered 1.9 per cent from its March-to-June low, placing it among the African currencies that regained part of their losses after the initial shock from the Middle East conflict.
The resilience is particularly significant because the second-quarter shock was driven by factors that ordinarily would put heavy pressure on an oil-importing economy, including higher energy prices, stronger demand for the US dollar, capital-flow uncertainty and geopolitical tensions.
Nigeria benefited from the other side of the oil-price shock. As crude prices rose, the country’s export earnings and potential dollar inflows strengthened, providing support for the foreign exchange market at a time when several African economies were confronting higher import bills.
The improvement has continued beyond the World Bank’s March-to-August comparison. The naira closed at N1,329.50 per dollar on September 30 and was quoted at N1,332.75 on October 7, remaining broadly within the N1,330 range in recent weeks.
The currency’s latest performance is a marked improvement from March, when it weakened to about N1,425 per dollar. Using the supplied NFEM closing data, the move to around N1,333 represents an appreciation of roughly 6.5 per cent from that March low.
The strengthening has coincided with a substantial improvement in Nigeria’s external buffers. Foreign exchange reserves have crossed $55 billion, while stronger export receipts, remittances and foreign portfolio inflows have increased dollar liquidity.
For businesses, the relative stability of the naira is economically important. A less volatile currency makes it easier for manufacturers and importers to price raw materials, equipment and other inputs, while exporters have greater certainty when converting foreign earnings. It can also slow the transmission of exchange-rate movements into consumer prices.
The World Bank projects Nigeria’s economy to grow by 4.3 per cent in 2026, with growth expected to reach 4.4 per cent in both 2027 and 2028.
But the currency’s resilience should not be mistaken for immunity.
Nigeria remains heavily dependent on crude oil for foreign exchange earnings, while foreign portfolio flows can change direction quickly when global financial conditions shift. A prolonged fall in oil prices, weaker production or renewed capital outflows could therefore revive pressure on the naira.
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