Nigeria’s currency rally is leaving dollar hoarders scrambling.
The naira extended its appreciation across both official and parallel foreign exchange markets this week, forcing many who bought dollars at elevated rates to offload at losses.
After months of volatility that encouraged speculative demand, the recent strengthening of the local currency is reversing fortunes in the informal market.
A street trader who spoke to BusinessDay admitted that many operators who stocked up on dollars when rates spiked are now counting their losses.
According to him, several traders purchased the greenback at significantly higher levels and are now forced to sell below cost as rates retreat.
That shift reflects a cooling of speculative demand and renewed confidence in the naira.
At the close of trading for the week, the naira strengthened in both major segments of the FX market.
In the parallel market, commonly referred to as the black market, the currency closed at N1,340 per dollar.
This marked a notable improvement from N1,420 recorded the previous Friday, representing an N80 gain or nearly 6 per cent appreciation week-on-week. Daily movements were also positive.
The naira gained N5 from N1,345 quoted on Thursday, February 19, 2926. Over a five-day trading stretch, it strengthened by N40, rising from N1,380 on Monday.
At the official window, the Nigerian Foreign Exchange Market operated by the Central Bank of Nigeria, the currency appreciated by N9.10 week-on-week.
It moved from N1,355.42 the previous Friday to N1,346.32 at the close of trading.
On a day-on-day basis, however, the naira slipped slightly, weakening by N4.97 from N1,341.35 on Thursday to N1,346.32 on Friday.
Despite that minor dip, the broader trend for the week remained positive.
One of the most significant developments was the narrowing gap between the official and parallel markets.
By Thursday, the spread between both markets had narrowed to just 0.29 percent, its tightest convergence level in two years.
Although the gap widened slightly to N6 by Friday, compared to N4 the previous day, the overall convergence signals improved price alignment and reduced arbitrage opportunities.
The black market rally had earlier pushed the naira to a three-year high of N1,345 per dollar before settling at N1,340 at week’s end.
This closer alignment between rates is widely seen as a positive indicator of improved liquidity and market coordination.
Supporting the strengthening currency is a steady rise in Nigeria’s external reserves. Data from the Central Bank of Nigeria show that reserves climbed to $48.50 billion as of February 17, 2026.
The upward trajectory enhances the apex bank’s ability to intervene in the FX market when necessary.
Higher reserves typically bolster investor confidence, as they signal improved capacity to defend the currency and meet external obligations. Market participants say the reserves buildup has contributed to easing pressure on the naira and calming speculative activity.
