Naira Gains 3.5% in Q3 as External Reserves Hit $54.9bn

The naira closed September at N1,329.50 per dollar, appreciating 0.5 per cent month on month and lifting its third quarter 2026 gain to 3.5 per cent. Data from the Central Bank of Nigeria (CBN) shows the currency held its ground despite heightened global uncertainty and geopolitical tensions in the Middle East.

The average exchange rate also improved by 1.9 per cent to N1,328.28 per dollar in September, from N1,353.41 in August. That points to sustained stability in the official foreign exchange market rather than a one-off spike.

Reserves and capital inflows

Nigeria's gross external reserves rose by a cumulative $6.5 billion over the past five months to reach $54.9 billion at the end of September. The bigger buffer strengthens the country's capacity to meet foreign exchange obligations and absorb external shocks.

Foreign portfolio inflows climbed to $15.8 billion in the first nine months of 2026, up from $12.2 billion in the same period of 2025. Relatively attractive domestic yields and improving market conditions have kept offshore investors interested in Nigerian financial assets.

Elevated crude oil prices have also improved the outlook for foreign exchange supply, given oil's weight in Nigeria's export earnings. Diaspora remittances remained resilient over the period.

Parallel market narrows the gap

The naira appreciated 1.8 per cent month on month in the parallel market to N1,380 per dollar in September. That left the parallel market rate N50.50 above the official closing rate, a narrower spread than in previous months, though some divergence remains.

The World Bank ranked the naira among the better-performing non-CFA African currencies in the second quarter of 2026, despite volatility linked to the Middle East conflict.

What it means for the naira

Expectations are that the naira will trade within a relatively narrow range in the near term if foreign exchange liquidity stays strong. Continued offshore participation, attractive yield differentials, higher oil receipts and resilient remittances are expected to support supply.

But persistent dollar demand from importers and manufacturers remains a source of pressure. Changes in global investor sentiment, oil prices and geopolitical developments could also shift market conditions. Holding onto these gains will depend on consistent inflows, stronger export earnings and continued confidence in Nigeria's financial markets.