By Boluwatife Oshadiya | May 26, 2026
Key Points
- Nigeria’s economy expanded by 3.89% in Q1 2026, according to NBS data
- Naira appreciated slightly at the NFEM window amid expectations of fresh FX inflows
- Global crude oil prices fell sharply on renewed optimism over possible US-Iran negotiations
Main Story
Nigeria’s foreign exchange market recorded renewed stability on Monday as stronger-than-expected economic growth data boosted investor confidence and supported demand for the naira across official and parallel market segments.
Data released by the National Bureau of Statistics (NBS) showed that Nigeria’s Gross Domestic Product (GDP) grew by 3.89% year-on-year in the first quarter of 2026, compared with 3.13% recorded in the corresponding period of 2025. The improved economic performance strengthened market sentiment around the local currency and reinforced expectations of sustained foreign exchange inflows.
At the Nigerian Foreign Exchange Market (NFEM) window, the naira appreciated marginally by 0.04% to close at ₦1,374.92 per dollar, according to figures published by the Central Bank of Nigeria (CBN). The local currency traded within a range of ₦1,373 to ₦1,377 against the dollar during the session.
Foreign exchange turnover at the official market, however, declined to $55.79 million across 71 deals, down from $62.34 million recorded at the previous session’s close, reflecting cautious market activity ahead of anticipated Open Market Operations (OMO) bill sales by the apex bank.
Analysts said expectations of fresh OMO auctions are attracting renewed interest from foreign portfolio investors seeking high-yield fixed-income instruments, a development expected to improve dollar liquidity in the near term.
In the parallel market, the naira strengthened by ₦5 to close at ₦1,390 per dollar, narrowing the spread between the official and unofficial markets to ₦15.08 from ₦18.54 recorded on Friday.
Nigeria’s external reserves also improved, rising to $48.98 billion from $48.89 billion, supported by inflows from crude oil sales and other foreign exchange sources.
Meanwhile, global oil markets came under pressure after reports indicated progress in diplomatic discussions between the United States and Iran, raising hopes of reduced supply disruptions across major Middle Eastern shipping routes.
Brent crude declined by about 7% toward $93 per barrel, while West Texas Intermediate (WTI) futures dropped nearly 8%, falling below the $90 benchmark level. Traders reacted to growing expectations that oil shipments through the Strait of Hormuz could normalise in the coming weeks if negotiations advance further.
The Issues
The naira’s recent stability comes as Nigerian authorities intensify efforts to rebuild investor confidence in the country’s foreign exchange framework after months of volatility and liquidity constraints.
The CBN has increasingly relied on aggressive monetary tightening and high-yield OMO instruments to attract offshore inflows and stabilise the local currency. However, analysts continue to warn that Nigeria’s FX market remains vulnerable to external shocks, particularly fluctuations in global crude oil prices, which remain the country’s largest source of foreign exchange earnings.
The sharp decline in oil prices could create fresh fiscal and FX pressures if sustained, especially at a time when Nigeria is working to strengthen reserves and improve dollar liquidity across the economy.
What’s Being Said
“The stronger GDP figures have improved sentiment around Nigerian assets and supported short-term demand for the naira,” analysts at Lagos-based investment firms said in market notes reviewed by BizWatch Nigeria.
“Foreign investors are likely positioning ahead of another round of OMO issuances given the attractive yields currently available in the fixed-income market,” currency traders told BizWatch Nigeria.
“Any prolonged weakness in crude oil prices could eventually weigh on reserves accumulation and limit the pace of FX recovery,” independent energy economists said following Monday’s oil market decline.
What’s Next
- Investors are expected to closely monitor the CBN’s next OMO bills auction for signals on foreign portfolio inflows and liquidity conditions
- Market participants will also watch movements in global crude oil prices amid ongoing US-Iran diplomatic discussions
- Further GDP and inflation data releases could shape monetary policy expectations ahead of the next Monetary Policy Committee meeting
Bottom Line
The Bottom Line: Nigeria’s stronger first-quarter economic growth has provided temporary support for the naira and improved market sentiment, but the currency’s outlook remains closely tied to external liquidity conditions and oil market performance. Sustained FX stability will likely depend on continued foreign inflows, reserve growth, and the CBN’s ability to maintain investor confidence in the broader monetary framework.
