By Abubakar Yunusa
The Nigerian currency showed consolidation against the American dollar after the recent bullish run for the Naira. after the pair peaked at N 1,389/$ earlier this month.
The pair is consolidating, but the bias is still downward (appreciating).
The latest price action showed the Naira saw a slight increase of roughly 0.3 per cent at the official market.
The exchange rate fell as low as N1,346.6/$ in the early hours of Monday before a return to N1,348/$.
The Naira has strengthened considerably since the beginning of 2026, from January’s N1,440/$ levels. Improved foreign exchange liquidity and persistent central bank interventions are major factors in this recovery.
The black market used by retail and small-scale businesses paints a somewhat different picture.
The US dollar is being quoted at a premium over the official rate by traders in Lagos and Abuja.
The parallel market is still a crucial indicator for small businesses and individuals who want quick access to foreign exchange, even though the price difference between the two markets has shrunk over the past year amid monetary reforms. Currently, the gap is less than five per cent.
Frequent auctions to Bureau De Change (BDC) operators have prevented the parallel market from getting out of control. The government now has more “firepower” to protect the currency because stable crude prices have increased foreign reserves.
Some portfolio investors are still drawn to high domestic interest rates.
The bearish scenario (Naira appreciates) assumes a breakdown of the pair through the support at N 1,340, with the psychological target seen at N 1,300/$. This scenario is supported by the increase in oil output and the steady rise in the oil reserve size, which is almost $48 billion.
Bullish scenario (Naira depreciates) assumes a close above N 1,360/$, opening the possibility of a retest at the N 1,380 range. This scenario will mostly play out in case of a seasonal increase in corporate demand and/or a negative political shock that will reduce oil revenue.
