Naira Appreciates 4.13% in February as CBN Mops Up Dollars to Stall Gains
- Nigeria currency, naira, appreciated by 4.13% in February, defying Central Bank intervention efforts
- Higher oil prices and improved reserves bolster confidence in Nigeria's foreign exchange outlook
- The Central Bank of Nigeria aims to balance currency stability with investor protection amid volatility
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Nigeria’s currency appreciated by 4.13 per cent in February, defying efforts by the Central Bank of Nigeria to slow its momentum through late-month dollar purchases.
A new report by the Financial Market Dealers Association shows the naira strengthened across both the official Nigerian Foreign Exchange Market and the parallel market, marking a notable shift from earlier volatility.
Source: Getty Images
The apex bank reportedly stepped in toward the end of the month to mop up excess foreign exchange liquidity, a move aimed at preventing what policymakers considered an overly rapid appreciation of the currency.
Why the CBN moved in
Market participants say the intervention was strategic. A sharply rising naira could unsettle investors who bought local fixed-income securities when the currency traded between N1,400 and N1,500 per dollar.
According to the dealers’ association, the central bank’s dollar purchases were meant to prevent distortions in investor positioning and protect returns tied to earlier exchange rate levels.
Even so, the naira ended the month stronger across both segments of the market, underscoring renewed confidence in Nigeria’s foreign exchange outlook.
Short-term pressures persist
Despite February’s rally, daily trading still reflects pockets of pressure. On Tuesday, the naira weakened by N6.27 at the official window, closing at N1,384.29 per dollar compared to N1,378.02 a day earlier.
The parallel market also recorded a modest slip, with the currency easing to N1,380 per dollar from N1,375.
Analysts note that while temporary pullbacks are expected, the broader trend remains supported by external factors, particularly developments in the global oil market.
Oil prices offer a buffer
Crude oil prices climbed toward $80 per barrel amid rising geopolitical tensions involving the United States and Iran.
The escalation has raised concerns about potential disruptions along the Strait of Hormuz, a route that handles roughly a quarter of global seaborne oil trade.
Market estimates suggest that a full disruption could push crude prices to between $120 and $150 per barrel.
For Nigeria, higher oil prices typically translate into stronger export earnings and improved dollar inflows.
However, analysts warn that a sustained oil spike could also fuel global energy costs, adding to inflationary pressures at home, according to a report by BusinessDay.
External reserves strengthen
Nigeria’s foreign exchange buffers have improved significantly. Gross external reserves rose to $49.69 billion as of late February, reflecting stronger inflows and tighter liquidity management.
CBN Governor Olayemi Cardoso recently disclosed that net external reserves surged 772.18 per cent over two years, reaching $34.80 billion at the end of 2025 from $3.99 billion in 2023.
The increase signals firmer reserve backing for the currency and enhanced policy credibility.
A delicate balancing act
The recent rally highlights a careful policy balance. On one hand, moderate appreciation boosts investor confidence and reinforces macroeconomic stability. On the other hand, excessive gains could disrupt carry trade positions and complicate fiscal benchmarks.
Source: Getty Images
For now, February’s 4.13 per cent gain reflects a currency regaining resilience, supported by stronger reserves and oil-driven inflows. Yet the central bank’s steady hand suggests that while stability is welcome, unchecked momentum is not.
Dollar climbs to 5-week high amid US-Iran tensions
Legit.ng earlier reported that a new exchange rate emerged in global currency markets after the US dollar surged sharply on Monday, March 2, 2026, driven by rising tensions between the United States and Iran.
Forex traders reported a strong flight-to-safety move, with investors pulling funds from riskier assets and piling into traditional safe havens.
The greenback gained ground against major trading peers, buoyed by geopolitical uncertainty and expectations that US interest rates will remain elevated for longer.
Proofreading by Kola Muhammed, copy editor at Legit.ng.
Source: Legit.ng
