By Iroyin Yoruba Television
Nigeria’s naira recorded a modest improvement in September as stronger foreign-exchange liquidity, increased oil receipts and growing market confidence supported the currency, while the country’s external reserves climbed to almost $55 billion.
The latest development is being closely watched by businesses, investors and households because movements in the foreign-exchange market have a direct effect on the cost of imported goods, industrial inputs, machinery, international services and other transactions that depend on access to foreign currency.
According to market data reported on Monday, the naira closed September at N1,329.16 to the United States dollar in the Nigerian Foreign Exchange Market, compared with N1,332.94 at the end of August. That represented an appreciation of about 0.28 per cent during the month.
The improvement was accompanied by a rise in Nigeria’s external reserves, which stood at approximately $54.95 billion as of October 2. The figure represents a substantial increase compared with the same period of the previous year and provides the Central Bank of Nigeria with a larger buffer for meeting external obligations and supporting orderly conditions in the foreign-exchange market.
NAIRA HOLDS RELATIVELY STEADY IN EARLY OCTOBER
Although the naira recorded an overall improvement in September, trading at the beginning of October remained relatively mixed.
The currency weakened marginally in Monday’s trading session, with the dollar quoted at about N1,331.69 in the Nigerian Foreign Exchange Market, compared with N1,330.09 recorded at the previous session.
The movement was relatively small, indicating that the currency remained broadly stable around the N1,330-per-dollar level in the official market.
The parallel market, however, recorded a stronger movement. The naira appreciated there by about 1.47 per cent, with the dollar changing hands at approximately N1,360, compared with N1,380 previously.
The narrowing difference between the official and parallel-market rates is significant because a smaller gap can indicate better alignment between the two segments of the foreign-exchange market.
Market analysts have linked the narrowing premium to improving convergence between official and parallel rates and relatively contained short-term pressure on the naira.
EXTERNAL RESERVES CONTINUE TO BUILD
One of the most significant developments behind the latest currency movement is the continued increase in Nigeria’s external reserves.
The reserves reached about $54.95 billion on October 2, according to data attributed to the Central Bank of Nigeria.
The latest figure represents a major increase from approximately $42.41 billion recorded around the same period in 2025. On a month-to-month basis, gross external reserves also rose from about $53.81 billion in August to $54.92 billion in September.
That represents an increase of roughly 2.07 per cent in one month.
External reserves are important to the Nigerian economy because they provide the monetary authorities with foreign-currency resources that can be used to meet international obligations and help maintain stability in the foreign-exchange market.
A stronger reserve position can also improve investor confidence because it gives the country greater capacity to respond to external shocks, particularly periods of heavy demand for dollars or weaker foreign-exchange inflows.
However, rising reserves do not automatically mean that every Nigerian household will immediately experience lower prices. The exchange rate is only one factor influencing the cost of goods and services, while transportation, energy, financing, logistics, taxation and domestic production costs also play major roles.
STRONGER OIL RECEIPTS SUPPORT THE MARKET
Nigeria’s continued dependence on crude oil earnings means that international oil prices and oil-related foreign-exchange inflows remain important to the country’s external position.
The latest market assessment indicated that stronger oil receipts contributed to improved foreign-exchange fundamentals.
Average Brent crude prices increased significantly during September, reaching about $99.95 per barrel, according to the data reported by BusinessDay.
Higher oil prices can strengthen Nigeria’s foreign-exchange position when increased export earnings translate into stronger inflows.
For an economy that has historically relied heavily on crude oil for foreign-exchange earnings, stronger oil receipts can provide additional support for the naira and external reserves.
At the same time, the benefit depends on several factors, including production levels, government revenue arrangements, oil-sector costs and the amount of foreign currency ultimately entering the domestic financial system.
CURRENT ACCOUNT AND TRADE SURPLUS ALSO IMPROVE
Nigeria’s external position has also benefited from improvements in its current account and trade balance.
The country recorded a current-account surplus of about $7.54 billion in the second quarter of 2026, exceeding an earlier projection of approximately $6.12 billion.
The current-account position reflects the balance between transactions involving goods, services, income and transfers between Nigeria and the rest of the world.
A stronger surplus can reduce pressure on a country’s foreign-exchange position because it indicates that more foreign currency is entering through external transactions than is leaving under the relevant components of the account.
Nigeria’s trade surplus also increased substantially, rising from about $5.45 billion in the first quarter to approximately $9.22 billion in the second quarter.
Remittance inflows also increased during the period, moving from about $5.28 billion to $5.49 billion.
Taken together, these developments provide a more favourable external backdrop for the naira, although the durability of the improvement will depend on whether stronger inflows can be sustained.
WHAT THE IMPROVEMENT MEANS FOR BUSINESSES
For Nigerian businesses that depend on imported raw materials, equipment or foreign services, greater stability in the exchange rate can make financial planning easier.
Sharp currency movements make it difficult for companies to determine the future cost of imports and can force businesses to increase prices to protect their margins.
A more stable foreign-exchange environment can reduce some of that uncertainty.
Manufacturers may also benefit if they are able to obtain foreign currency at more predictable rates for machinery and production inputs.
Importers, airlines, technology companies, pharmaceutical firms and other businesses with significant foreign-currency exposure are particularly sensitive to movements in the naira.
However, the impact will not be uniform. Companies with large dollar obligations could continue to face significant costs even when the naira is relatively stable, particularly if international prices remain elevated.
HOUSEHOLDS MAY NOT FEEL THE EFFECT IMMEDIATELY
Despite the positive signals from the foreign-exchange market, consumers may have to wait before any improvement becomes clearly visible in everyday prices.
Exchange-rate changes generally take time to pass through the economy.
Retailers may still be selling goods purchased when the dollar was more expensive. Manufacturers may also have inventories acquired at earlier exchange rates, while transportation and energy costs can continue to influence the final price of products.
This means that a stronger naira should not automatically be interpreted as an immediate reduction in the cost of living.
The more important question for households is whether exchange-rate stability can be sustained long enough for businesses to lower their operating and replacement costs.
If stability continues, companies may gradually gain greater confidence in pricing, investment and inventory decisions.
THE IMPORTANCE OF SUSTAINING THE TREND
The latest figures represent encouraging developments for Nigeria’s external sector, but policymakers still face the challenge of maintaining the conditions that produced the improvement.
A stronger reserve position, increased oil receipts and improved foreign-exchange liquidity can provide important support, but Nigeria remains exposed to movements in international oil prices, global financial conditions, domestic demand for foreign currency and changes in investor sentiment.
The country also needs to continue strengthening non-oil exports and domestic production so that foreign-exchange earnings are not excessively dependent on crude oil.
Expanding manufacturing, agriculture, services and other export-oriented sectors could provide a broader foundation for the currency over the longer term.
Greater domestic production can also reduce the amount of foreign currency required to import goods that could otherwise be produced locally.
For businesses, the current environment could therefore create an opportunity to expand production and invest in capacity, provided access to finance and other operating conditions improve.
OUTLOOK FOR THE NAIRA
The latest figures suggest that Nigeria’s foreign-exchange position has become more resilient compared with previous periods of severe pressure.
The naira’s 0.28 per cent September appreciation, the increase in external reserves to nearly $55 billion and the narrowing gap between official and parallel-market rates are all developments that could strengthen confidence in the currency.
Nevertheless, the gains should be viewed as part of an ongoing economic adjustment rather than evidence that all foreign-exchange challenges have been resolved.
The durability of the trend will depend on continued foreign-exchange inflows, oil receipts, reserve accumulation, investor confidence and the ability of monetary authorities to maintain a more orderly market.
For Nigerians, the ultimate test will be whether improved currency stability eventually translates into more predictable business costs, stronger investment, increased domestic production and gradual relief from inflationary pressure.
For now, the latest market figures provide a positive signal for Nigeria’s external position, but sustaining that progress will require continued reforms and stronger productive activity across the wider economy.