By Àkànní Olúwaségún Michael
The naira appreciated by 13.5 per cent against the United States dollar over the past year, closing May 2026 at N1,372/$ in the official foreign exchange market, a development that signals improving confidence in Nigeria’s FX market amid ongoing economic reforms.
Data from the Central Bank of Nigeria (CBN) showed that the local currency gained N213.50 against the dollar compared to N1,585.50/$ recorded at the end of May 2025.
Despite the annual gain, the naira weakened slightly by 0.36 per cent in May, closing at N1,372/$ compared to N1,367/$ at the end of April.
The currency, however, maintained relative stability throughout the month, trading within a narrow range as the foreign exchange market consolidated gains recorded earlier in the year.
Market data showed that the naira opened May at N1,367.50/$ and appreciated to N1,358.01/$ on May 7, its strongest level during the month.
It later traded between N1,372/$ and N1,375/$ for most of the period before closing at N1,372/$ on May 29.
The naira’s stability comes as the Central Bank continues efforts to strengthen the foreign exchange market through policy measures aimed at improving transparency and boosting liquidity.
The currency’s performance also coincided with an improvement in Nigeria’s external reserves, providing additional support for market stability.
The gains recorded in May extend a positive trend that began earlier in the year. In April, the naira appreciated from N1,387/$ at the end of March to N1,374/$, making it one of the first months since 2024 in which the currency closed stronger than it opened.
For investors, the relative stability of the currency has become a key signal that Nigeria’s foreign exchange market is gradually regaining credibility. Foreign portfolio investors, who had previously expressed concerns about currency risks and market transparency, are increasingly viewing exchange-rate stability as an indication of improving policy consistency.
The Central Bank’s decision to maintain a tight monetary policy stance has also played a role in supporting the currency. At its May Monetary Policy Committee meeting, the apex bank retained the Monetary Policy Rate at 26.5 per cent while leaving the Cash Reserve Ratio for commercial banks at 45 per cent and merchant banks at 16 per cent.
The CBN said the decision was necessary to consolidate gains in inflation control and foreign exchange market stability.
Despite the improvement, challenges remain. Inflation continues to weigh on household incomes, while businesses face elevated energy, logistics and borrowing costs.
The exchange-rate stability alone will not be sufficient to drive broad-based economic recovery unless accompanied by stronger productivity, increased export earnings and higher crude oil production.
Nevertheless, the naira’s 13.5 per cent appreciation over the past year is being viewed as one of the clearest signs yet that reforms aimed at restoring order to the foreign exchange market are beginning to yield results.
As the second half of 2026 begins, policymakers, investors and businesses will be watching closely to see whether the recent stability can be sustained and translated into lower inflation, stronger investment inflows and improved economic growth.
