The naira posted a split performance across Nigeria’s foreign exchange markets on Wednesday, January 21, 2025, reflecting persistent distortions between the official and parallel segments even as analysts grow more optimistic about the currency’s medium-term outlook.

At the official Nigerian Foreign Exchange Market (NFEM), the naira weakened marginally, closing at ₦1,420.69 to the dollar.

Data published on the Central Bank of Nigeria’s website showed the local currency shed ground despite signs of improved dollar supply from domestic participants.

In contrast, the naira strengthened slightly in the parallel market, trading at about ₦1,480 per dollar, according to Cowry Asset Management Limited.

This represents a 0.03 per cent appreciation on the day, highlighting the often-contradictory movements between both markets.

Parallel market volatility persists

Not all market trackers recorded gains in the black market. CardinalStone reported that the naira actually slipped to ₦1,492 per dollar at the parallel market, compared with ₦1,490 on Tuesday, January 20, 2026, underscoring ongoing volatility and the lack of a unified pricing structure.

According to a Punch report, the divergence illustrates the fragile balance in the unofficial market, where sentiment, cash scarcity, and speculative demand continue to influence pricing more than underlying fundamentals.

Improved supply lifts official market trading

A day earlier, AIICO Capital noted that the naira had briefly strengthened below ₦1,420 per dollar at the official window, supported by improved foreign exchange inflows from local sources.

According to its January 20 market report, trades were executed within a relatively narrow band of ₦1,421.00 to ₦1,418.40 per dollar.

The firm added that Nigeria’s external reserves continued to expand, rising by $49.34 million to $45.95 billion as of January 19, 2026.

Analysts say the steady reserve build-up provides a buffer against external shocks and supports confidence in the currency market.

Analysts see stability in the near term

Market analysts expect the naira to hover around current levels in the short term, provided there are no major disruptions to dollar supply or sudden spikes in demand.

The cautious outlook persists despite the erratic behaviour of the parallel market.

Still, several research houses believe the broader macroeconomic environment is gradually tilting in favour of a stronger naira.

2026 outlook: Stronger naira, lower inflation

Cordros Securities is among the firms projecting a firmer naira in 2026, driven by improved agricultural output, easing inflationary pressures, and declining global oil prices.

In its outlook report titled Building Momentum Beyond the Rebound, Cordros forecasts the naira to trade within ₦1,350 to ₦1,450 per dollar in 2026, compared with its year-end 2025 estimate of ₦1,450.

The firm also projects headline inflation to slow to 16.3 per cent year-on-year, before easing further to 14.7 per cent by December 2026.

Why a stronger naira matters

Analysts note that a firmer naira would lower the cost of imported goods and industrial raw materials, particularly food prices and manufactured products.

Combined with lower fuel prices, projected to average ₦817.50 per litre, logistics and production costs are expected to ease.

Cordros added that increased mechanisation and better access to farm inputs would support higher crop yields, helping to stabilise food prices.

With food accounting for about 40 per cent of Nigeria’s consumer price index, agricultural output is seen as a critical driver of the anticipated disinflation trend.

Persistent gaps, improving fundamentals

While the gap between the official and parallel markets remains a concern, analysts say improving reserves, stronger domestic supply, and structural reforms point to a more stable naira outlook in the year ahead, even as short-term volatility lingers.