By Boluwatife Oshadiya | August 3, 2026
Key Points
- The naira has appreciated about 4.7% against the US dollar since the beginning of 2026
- Cordros Capital says the currency is now only 2% below its estimated fair value
- Analysts expect the naira to trade between ₦1,350/$ and ₦1,400/$ through the second half of 2026
Main Story
The Nigerian naira strengthened by about 4.7% against the US dollar in the first seven months of 2026, supported by sustained foreign exchange (FX) interventions by the Central Bank of Nigeria (CBN), resilient foreign portfolio investment (FPI) inflows, and improved dollar liquidity from exporters and non-bank corporates.
The local currency opened the year at approximately ₦1,435/$ at the official market and closed July at about ₦1,366/$, despite recording losses during the final trading week of the month. According to Cordros Capital Limited, the naira reached its strongest level of around ₦1,335/$ in February, driven by robust foreign portfolio inflows, broad-based weakness in the US dollar, and attractive carry trade opportunities.
However, renewed geopolitical tensions following the US-Iran conflict temporarily weakened the currency, pushing it to about ₦1,407/$ by March 9 before it recovered and resumed trading within a relatively stable range of ₦1,360/$ to ₦1,380/$.
The investment firm noted that the pace of appreciation has moderated as foreign exchange liquidity conditions have become less favourable in recent months.
“We expect the naira to remain relatively stable, supported by a strong current account position and resilient FPI inflows amid still-subdued demand pressures. However, upside room from current levels has narrowed,” Cordros Capital said in its second-half 2026 macroeconomic outlook.
Cordros’ valuation model estimates that the naira is now only 2.0% undervalued, with a fair value of approximately ₦1,350.20/$ compared with the average exchange rate of ₦1,377.75/$ recorded so far in 2026. The firm said this marks a significant improvement from 2025, when it estimated the currency was undervalued by 18.7%.
What’s Being Said
“The model now suggests an undervaluation of 2.0%, with a fair value estimate of ₦1,350.20/$ compared with the average exchange rate of ₦1,377.75/$ so far in 2026. This implies that the naira has moved much closer to fair value, limiting the scope for further appreciation,” Cordros Capital Limited said.
Analysts at the firm also warned that rising geopolitical tensions, increased portfolio outflows, tighter global financial conditions, and uncertainty ahead of Nigeria’s 2027 general elections could increase exchange rate volatility, potentially pushing the naira towards ₦1,450/$ by year-end under a downside scenario.
What’s Next
- Cordros expects the naira to trade within the ₦1,350/$–₦1,400/$ range during the second half of 2026.
- The firm forecasts the currency to settle around ₦1,350/$ by year-end, supported by a relatively strong current account and sustained foreign portfolio inflows.
- Analysts will continue to monitor pre-election spending, importer demand for foreign exchange, and global market conditions for their impact on exchange rate stability.
The Bottom Line: The naira’s strong recovery in 2026 has significantly narrowed its valuation gap, suggesting that the era of rapid appreciation may be ending. Future performance is likely to depend more on macroeconomic stability, FX liquidity, and investor confidence than on valuation-driven gains.
