By Boluwatife Oshadiya | May 27, 2026
Key Points
- Naira weakened slightly at the official market amid rising demand for dollars, euros and pounds
- Nigeria’s external reserves climbed to $49.259 billion on stronger FX inflows
- Oil prices remained volatile as tensions between the U.S. and Iran intensified
Main Story
The Nigerian naira weakened slightly across foreign exchange markets on Tuesday as rising demand for the U.S. dollar, euro and British pound outweighed available foreign currency supply at the official window.
Data released by the Central Bank of Nigeria showed the naira closed at ₦1,375.4073 per dollar, compared with ₦1,374.9172 recorded in the previous trading session.
The local currency came under pressure amid increased demand for hard currencies by importers, manufacturers and foreign exchange users despite continued interventions by the apex bank.
CBN data showed the exchange rate traded within a band of ₦1,375 to ₦1,376.99 during the session, while total interbank FX turnover rose sharply to $73.598 million across 110 deals from $55.786 million recorded a day earlier.
Despite the mild depreciation, market analysts maintained a relatively positive outlook for the naira, citing improved foreign exchange inflows and stronger external reserves, which climbed to $49.259 billion.
Analysts said sustained oil receipts and continued FX market interventions by the CBN could help stabilise the currency in the first half of 2026.
Meanwhile, developments in the global oil market continued to shape investor sentiment around Nigeria’s foreign exchange outlook. Brent crude futures climbed above $99 per barrel after renewed geopolitical tensions between the United States and Iran heightened concerns over global oil supply disruptions.
The rise in crude prices followed U.S. military strikes in southern Iran and escalating rhetoric between Washington and Tehran over ongoing negotiations and regional security concerns.
Higher oil prices are generally seen as supportive for Nigeria’s FX reserves and fiscal position because crude oil exports account for the bulk of the country’s foreign exchange earnings.
The Issues
Nigeria’s foreign exchange market continues to face structural demand pressures despite ongoing reforms by the Central Bank of Nigeria. The country remains heavily dependent on imports for industrial inputs, machinery and refined petroleum products, creating persistent pressure on dollar demand.
Although the CBN has increased FX interventions and implemented measures aimed at improving market liquidity, analysts say exchange rate stability will depend largely on sustained foreign capital inflows, oil production performance and reserve adequacy.
The recent rise in global oil prices could provide temporary relief for Nigeria’s reserves position, but geopolitical tensions also increase uncertainty in global financial markets.
What’s Being Said
“The improvement in reserves provides a stronger buffer for the naira and enhances the CBN’s ability to support liquidity in the FX market,” said analysts at Afrinvest West Africa.
“We expect the naira to remain relatively stable in the near term if oil prices stay elevated and external inflows continue,” said analysts at Cowry Asset Management.
“The key challenge remains underlying dollar demand pressure from import-dependent sectors of the economy,” said economist Johnson Chukwu.
What’s Next
- Investors will monitor the CBN’s next FX intervention strategy and liquidity management measures
- Global oil market developments and geopolitical tensions in the Middle East are expected to influence Nigeria’s FX outlook
- Analysts expect Nigeria’s external reserves trajectory to remain closely tied to crude oil prices and export earnings
The Bottom Line: Nigeria’s improving FX reserves are providing temporary support for the naira, but persistent demand for foreign currency continues to expose structural weaknesses in the country’s import-dependent economy. Sustained currency stability will likely depend on stronger non-oil exports, consistent capital inflows and continued reserve growth.
