Naira Drops at Official Window as 2026 FX Projections Emerge
The naira declined against the U.S. dollar at the Nigerian Foreign Exchange Market (NFEM) on Friday as corporate foreign payments began to pick up again.
The FX spot rate dropped by 0.24% to ₦1,423.17/$ after a four-day gaining streak, touching an intraday high of ₦1,430, suggesting market demand eclipsed supply significantly.
The naira also dropped to ₦1,465/$ in the parallel market, reflecting renewed currency pressures and softening sentiment across both the regulated official segment and the informal foreign exchange market.
In its outlook for 2026, AIICO Capital Limited said the naira will trade between N1350 and N1400, saying the local currency was undervalued last year. MarketForces Africa reported that the naira gained 7.5% in 2025, its first annual gain in 13 years, according to CardinalStone Partners Limited.
“The naira remained undervalued for much of the year, but the extent of misalignment declined materially compared with 2024,” the investment firm said.
The investment noted that estimates from fundamental exchange-rate models suggest that undervaluation narrowed from over 35% in 2024 to below 20% in 2025, signalling partial convergence toward its fair value.
Analysts said the adjustment was supported by stronger external inflows from Foreign Portfolio Investors (FPIs), improving current account dynamics, and more disciplined FX management by the authorities.
Overall, while the naira did not fully return to its estimated fair value in 2025, it exhibited significantly greater resilience and stability, AIICO said.
“Reduced depreciation pressures, firmer external buffers, and improving investor sentiment suggest that the foundations have been laid for further consolidation and potential appreciation over the medium term.
“Going forward, the Naira is expected to strengthen to a range of ₦1,400/$ to ₦1,350/$ as FX market inefficiencies continue to unwind, external inflows improve, and consistent policy discipline supports investor confidence, allowing the exchange rate to align more closely with its underlying fundamentals,” the firm said. CBN Directs Banks to Refund App Fraud Victim in 48 Hours
