No More N1,388/$: Finally, Naira Rebounds Amid External Reserves Decline
- Nigeria's naira gains strength, closing at N1,382.63 per dollar amid improved liquidity
- Foreign exchange inflows surged 45%, bolstering market liquidity and attracting investors
- Despite declining reserves, Nigeria’s net usable reserves show significant resilience and improvement
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Nigeria’s currency showed fresh signs of strength on Tuesday, March 24, 2026, offering a glimmer of relief in a volatile foreign exchange landscape.
The naira appreciated at the Nigerian Foreign Exchange Market (NFEM), closing at N1,382.63 per dollar, an improvement from N1,388.38 recorded a day earlier.
Source: Getty Images
FX inflows jump as investor interest grows
Figures released by the Central Bank of Nigeria revealed the local currency gained N5.75, marking a 0.42 per cent rise.
The rebound was largely supported by improved liquidity conditions, signalling a temporary easing of pressure in the official FX window.
Meanwhile, in the parallel market, the naira remained steady at N1,415 per dollar, reflecting relative calm in that segment.
However, the gap between official and black market rates widened to N33 from N27, pointing to persistent inefficiencies in the broader FX system.
A key driver behind the naira’s rebound has been a surge in foreign exchange inflows. Data from FMDQ Group showed total inflows climbed 45 per cent month-on-month to $4.4 billion in February.
This marks the third consecutive monthly increase, fueled largely by strong participation from foreign portfolio investors.
According to a report by BusinessDay, attracted by Nigeria’s high-yield environment, these investors are increasingly positioning the country as a lucrative carry trade destination.
The influx of offshore funds has helped boost market liquidity, providing much-needed support for the naira amid rising demand for dollars.
Experts believe that Nigeria is now seen as the beautiful bride with equity investors pouring dollars into the economy.
"Recently, the Nigerian stock market exceeded the N200 trillion, signalling strong and renewed confidence in the economy," Janet Ogochukuw, senior banker and economist, told Legit.ng.
External reserves extend decline
Despite the positive momentum in the FX market, Nigeria’s external reserves continue to trend downward, underscoring the fragile balance facing policymakers.
Reserves fell for the sixth straight session, declining by 0.84 per cent to $49.60 billion as of March 23, 2026, down from a recent peak of $50.02 billion recorded earlier in the month.
While this drop may raise concerns, analysts caution against focusing solely on headline figures.
Stronger reserve quality signals resilience
According to a report by VNL Capital Asset Management, the underlying strength of Nigeria’s reserves has improved significantly in recent years.
Net usable reserves, funds readily available for immediate intervention, have surged from $3.99 billion at the end of 2023 to $34.80 billion by the close of 2025. This sharp increase highlights improved liquidity and a stronger buffer against external shocks.
Gross reserves have also remained robust, exceeding $45 billion and covering nearly 10 months of imports, well above global adequacy benchmarks.
Reforms and gold strategy boost stability
The improvement in reserve quality has been driven by a wave of structural reforms, a report by MarketForces Africa said.
These include the unification of the FX market, settlement of legacy obligations, and the removal of fuel subsidies, steps that have eased pressure on Nigeria’s external accounts.
In addition, tighter monetary policy has helped curb excess demand for foreign exchange, while improved policy credibility has encouraged inflows from remittances, exports, and foreign investments.
Another notable strategy has been the Central Bank’s increasing gold reserves.
Gold holdings rose from about $2.6 billion in late 2025 to roughly $3.5 billion in the first quarter of 2026.
Source: Getty Images
These purchases, funded in naira through domestic mining, have strengthened reserve diversification without draining FX resources.
Naira appreciates 4.13% in February
Legit.ng earlier reported that 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.
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.
Source: Legit.ng
