The Nigerian Naira has been on a strong upward trajectory, particularly since the beginning of September, with the official exchange rate reaching approximately ₦1,329 per US dollar on September 1, 2026. This represents an appreciation of about 1% in a week, moving from ₦1,343 per dollar on August 26 to ₦1,329.43 by September 1. This gain is largely attributed to increased investor confidence, robust external reserves, and higher hydrocarbon sales by the Nigerian government, moving the currency beyond some analysts' year-end target of ₦1,350.
Nigeria's external reserves have also seen significant growth, reaching approximately $53.806 billion by the end of August. This marks the highest level since January 2009, when reserves were at $53.25 billion. The reserves increased by about $3.15 billion between June 3 and August 24, from $49.96 billion to $53.11 billion. This substantial increase in reserves provides a stronger dollar buffer for the economy and supports confidence in the Naira, as noted by experts who link the rise to increased crude oil prices and a tight monetary policy by the Central Bank of Nigeria.
The improved liquidity in the Nigerian Foreign Exchange Market (NFEM) is another key factor. Interbank foreign exchange turnover climbed to $130.45 million on September 1, up from $105.64 million the previous day, with the number of transactions increasing from 118 to 139. August alone saw about $14.45 billion in turnover across 19 trading days, a 13.8% increase from July's $12.69 billion. This heightened activity and dollar availability, despite tight intraday trading ranges, suggest a healthier foreign exchange market.
Economically, Nigeria's GDP grew by 4.43% year-on-year in the second quarter of 2026, up from 4.23% in Q2 2025 and 3.89% in Q1 2026. The appreciation of the Naira has also contributed to an expansion of the economy by approximately 17% in US dollar terms between H1 2025 and H1 2026. The Federal Ministry of Finance indicates this growth trajectory positions Nigeria to achieve its target of a $1 trillion GDP by 2030. While the official market shows strong gains, the parallel market still quotes the dollar around ₦1,400 to ₦1,410, highlighting a gap between official and informal rates.
