The naira experienced a notable rebound across various markets last week, primarily driven by liquidity injections from the Central Bank of Nigeria (CBN) and the positive impact of enhanced domestic oil refining capabilities. This development marks a significant shift in the currency's performance after years of volatility.

The domestic currency demonstrated a positive trading performance, appreciating by 7.9 per cent in the parallel market to exchange at N1,330.00 per dollar. Simultaneously, the official window saw the naira strengthen by 0.7 per cent, reaching N1,346.32 per dollar. Consequently, the spread between the parallel market and official rates narrowed from N77.22 to N16.32 last week.

Ike Chioke, Managing Director of Afrinvest West Africa Limited, anticipates the naira will continue to trade within a similar band in the short to medium term. He attributes this bullish outlook to the CBN’s ongoing liquidity support and the increased activity stemming from strategic domestic oil refining.

Brent Crude Oil, a benchmark, rose by 5.7 per cent week-on-week to settle at $71.58/bbl. This increase was influenced by renewed tensions between Washington and Tehran, sparked by potential military actions threatened by President Trump if Iran does not agree to a nuclear deal. These tensions raised concerns about potential supply disruptions via the Strait of Hormuz, a crucial route for global oil flows.

CBN data as of February 17, 2026, showed that the country's foreign reserves advanced by 1.5 per cent week-on-week, settling at $48.5 billion.

Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria (ABCON), noted that the naira has maintained stability across markets for several months, effectively ending years of market volatility.

Bismarck Rewane, Managing Director of Financial Derivatives Company (FDC), estimates the fair value of the naira at about N1,257 to the US dollar. Speaking at the 2026 Economic Outlook organised by the Association of Corporate Treasurers of Nigeria (ACTN), Rewane suggested that the local currency is undervalued by approximately 11 per cent when assessed using the purchasing power parity (PPP) model.

Rewane posits that currencies typically converge towards their PPP-implied values over a five-year horizon, stating that the appropriate exchange rate based on current PPP estimates stands at N1,256.79 to the dollar.

Dr. Muda Yusuf, founder/Chief Executive Officer of the Centre for the Promotion of Public Enterprise (CPPE), expressed a positive outlook for Nigeria’s external reserves, citing the forex and fiscal reforms as key drivers of stability and improvement. He believes that Foreign Direct Investment (FDI), portfolio investments, diaspora flows, and non-oil exports are significantly contributing to the reserves, beyond the traditional reliance on oil revenue.

Other analysts emphasize that sustained growth in external reserves throughout 2026 hinges on the CBN avoiding excessive FX intervention, fiscal authorities maintaining spending discipline, and the FX reforms remaining intact.

The CBN, in its 2026 Macroeconomic Outlook for Nigeria, projected that Nigeria’s external reserve would rise to $51.04 billion in 2026, compared with US$45.01 billion in 2025. The projection is supported by stronger oil earnings, foreign exchange (FX) market reforms, and improved external inflows. The apex bank anticipates reduced pressure in the FX market due to increased oil earnings, sovereign bond issuance, and diaspora remittance inflow.