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Naira Rallies Against US Dollar

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  Published in Stocks and Investing on Wednesday, February 18th 2026 at 6:38 GMT by legit
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Lagos, Nigeria - Wednesday, February 18th, 2026 - The Nigerian Naira continues its remarkable rally against the US dollar, marking a sustained period of appreciation that began following pivotal interventions by the Central Bank of Nigeria (CBN). While the currency's resurgence is a welcome sign for Africa's largest economy, the foreign exchange (FX) market remains dynamic, with a notable - though narrowing - gap persisting between official rates, bank quotes, and parallel market transactions.

As of today, February 18th, 2026, the CBN's official exchange rate stands at approximately N1,385/$1 - a significant improvement from the N1,549.27/$1 recorded on February 14th, 2024, as initially reported by BusinessDay. Banks are currently quoting rates averaging N1,450/$1, while traders, particularly those operating in the more fluid parallel markets, are offering dollars at around N1,480/$1. The decreasing disparity is a clear indication that the CBN's policies are gaining traction, and the market is responding to increased dollar liquidity.

The Genesis of the Rally: Policy Shifts and CBN Intervention

The current stability isn't accidental. The catalyst for the Naira's appreciation was the CBN's late 2023-early 2024 decision to move towards a more flexible exchange rate regime. For years, Nigeria had attempted to maintain a fixed or tightly managed exchange rate, which led to significant pressure on the Naira and fueled a thriving black market. The shift towards flexibility aimed to allow market forces - supply and demand - to play a greater role in determining the currency's value.

However, simply allowing for flexibility wasn't enough. The CBN simultaneously implemented a program of direct interventions, injecting substantial amounts of US dollars into the market. These injections were sourced from a combination of strategies, including increased oil revenue (benefiting from slightly higher global oil prices in late 2025), remittances from Nigerians living abroad (encouraged through incentives and improved reporting mechanisms), and a limited allocation of foreign reserves.

Beyond the Numbers: What Drives the Stabilization?

The Naira's strengthening isn't solely a technical correction following the policy changes. Several underlying factors are contributing to sustained stability. Firstly, increased confidence in the Nigerian economy is attracting foreign portfolio investment (FPI). The CBN's commitment to transparency and a more predictable FX regime is reassuring investors who had previously been hesitant to enter the Nigerian market. While FPI is still below pre-2020 levels, the trend is definitively upward.

Secondly, the CBN has been actively working to curb speculative demand for dollars. This includes stricter regulations on Bureau de Change (BDC) operators and enhanced monitoring of FX transactions. By reducing the incentive for hoarding and speculative trading, the CBN has helped to increase the available dollar supply.

Thirdly, the recent performance of key sectors, notably agriculture and manufacturing, are starting to reduce Nigeria's reliance on imports. Government initiatives focused on import substitution and local production are beginning to bear fruit, lessening the demand for foreign currency.

Challenges Remain: Navigating Continued Volatility

Despite the positive trend, challenges remain. The difference between official rates and parallel market rates, although narrowing, still exists, indicating ongoing inefficiencies and the presence of arbitrage opportunities. Maintaining the current level of dollar supply will be crucial. A sharp decline in oil prices or a significant outflow of foreign investment could quickly reverse the gains made in recent months.

Furthermore, the global economic landscape remains uncertain. Geopolitical tensions, rising interest rates in developed economies, and potential recessionary pressures could all impact the Nigerian economy and the Naira's value. The CBN will need to remain vigilant and proactive in managing these risks.

The ongoing reforms to Nigeria's financial system, particularly within the banking sector, also play a critical role. Strengthening bank regulation and supervision is essential to ensure financial stability and attract foreign investment. The CBN is actively promoting fintech solutions to improve the efficiency of FX transactions and reduce the reliance on cash-based trading.

Looking Ahead: A Sustainable Future for the Naira?

The Naira's recent performance is encouraging, but sustainability is the key. The CBN must continue to strike a balance between allowing market forces to operate and intervening to stabilize the currency. Transparency, consistency, and a commitment to sound macroeconomic policies will be essential to maintain investor confidence and attract long-term investment. If these conditions are met, the Naira could be poised for continued, sustainable appreciation, fostering economic growth and stability in Nigeria.