Dollar Crashes by N329 As Naira Exchange Rate Hits Strongest Level in 2 Years
- Nigeria's naira reached its strongest level in two years in the official FX market, defying concerns over a recent interest-rate cut
- The CBN's deputy governor revealed that autonomous sources accounted for nearly 68%
- Nigeria's external reserves climbed to $54.98 billion as of October 6, 2026
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Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The naira climbed to its strongest position in two years, trading at N1,331.77 per dollar in the official foreign exchange market on Wednesday, October 8, 2026, from the previous rate of N1,340, as stronger dollar supply and improved market conditions continued to support the local currency.
The Central Bank of Nigeria (CBN) data showed that the naira had gained 24.68%, equivalent to N328.72, against the dollar from N1,660.49 recorded on October 18, 2024.
Source: Getty Images
In the parallel market, the currency has recovered approximately N350 from its 2024 levels, representing a 25.55% gain.
On a day-on-day basis, however, the naira traded at around N1,370 to the dollar on Wednesday, October 8.
What is driving the naira's recovery
A new report by FSDH Merchant Bank said the naira strengthened from around N1,650 per dollar in December 2024 to N1,329 per dollar on September 24, 2026.
FSDH analysts said:
"The appreciation reflects stronger autonomous FX supply, rising external reserves and improved confidence in the market-based FX framework."
They added that exchange-rate volatility had moderated significantly compared with the turbulence seen in 2025 and early 2026.
CBN Deputy Governor Muhammad Sani Abdullahi, speaking at the 38th Seminar for Finance Correspondents and Business Editors, said the structure of inflows had shifted significantly.
Of the $10.82 billion in total FX inflows recorded in July 2026, $7.33 billion, or nearly 68%, came from autonomous sources.
Remittances through International Money Transfer Operators reached $950 million during the month, while net foreign portfolio inflows totalled $6.31 billion between January and August 2026.
Nigeria's gross external reserves stood at $55.60 billion as of September 11, 2026, with the end-August reserve position providing 11.3 months of import cover.
Abdullahi also pointed to broader economic progress, with headline inflation falling to 15.43% in July 2026 from a peak of 34.8% in December 2024.
Real GDP also grew by 4.43% in the second quarter of 2026, driven mainly by non-oil activity.
Abdullahi said:
"These outcomes reflect several influences, including monetary policy, oil receipts, remittances and global financial conditions.
"They show progress, but they do not mean the pressure on households and businesses has ended."
Source: Getty Images
Analysts urge caution despite gains
The naira's rally comes even as the Monetary Policy Committee cut the Monetary Policy Rate to 23% from 26.5%, recalibrating its asymmetric corridor while leaving the Cash Reserve Ratio and liquidity ratio unchanged.
Coronation Merchant Bank cautioned that the rate cut should not be read as the start of a prolonged easing cycle, describing it instead as "a reset designed to restore the effectiveness of the monetary policy framework."
United Capital analysts warned that portfolio inflows, while beneficial, remain reversible.
They said:
"While stronger reserves and external balances provide policy flexibility, they do not eliminate Nigeria's vulnerability to shifts in global risk and investor sentiment."
CBN announces biggest interest rate cut
Earlier, Legit.ng reported that the Central Bank of Nigeria (CBN) has reduced its benchmark interest rate by 350 basis points to 23%, the largest cut to the Monetary Policy Rate (MPR) in the bank's history, in a move that could lower borrowing costs across the Nigerian economy.
CBN Governor Olayemi Cardoso announced the decision on Tuesday, September 22, 2026, following a two-day sitting of the Monetary Policy Committee (MPC) in Abuja.
At its 307th meeting, the committee voted to bring the MPR down from 26.50% to 23%.
Source: Legit.ng
