The naira weakened to ₦1,365 per dollar on October 22, recording its steepest daily decline in 18 months
The naira weakened by ₦28 against the US dollar to close at ₦1,365/$ on October 22, 2026, recording its sharpest single-day decline since April 2025 and reversing recent relative stability in the official foreign exchange market.
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The exchange rate fell from ₦1,337/$ on October 21, representing a depreciation of approximately 2.1% in one trading session. The latest movement was the largest daily decline in the closing rate since April 9, 2025, when the currency weakened by ₦29 to ₦1,644/$.
The depreciation comes amid substantial demand for foreign exchange and continued movement in investment flows. Although Nigeria’s external reserves have risen above the Central Bank of Nigeria’s earlier year-end projection, the latest exchange-rate movement highlights the need to monitor dollar demand and market liquidity.
Naira Reverses Recent Gains
The latest decline followed relatively modest movements earlier in the week. The naira closed at ₦1,334.99/$ on October 20 before weakening to ₦1,337/$ on October 21.
On October 22, the exchange rate reached an intraday high of ₦1,369/$ and a low of ₦1,336/$.
The weighted average exchange rate increased to ₦1,344.40/$ from ₦1,334.72/$ a day earlier, while the simple average rose to ₦1,344.66/$ from ₦1,335.41/$.
The market recorded 181 interbank transactions, with reported turnover of approximately ₦316.55 million.
The scale of the daily movement contrasts with the relatively narrow range of ₦1,330–₦1,340/$ recorded during much of the preceding period. However, one session’s depreciation does not establish whether the currency has entered a sustained weakening trend.
High Dollar Demand Adds to Market Pressure
Nigeria’s foreign exchange market continues to face substantial demand for dollars. Analysis of Financial Markets Dealers Association data by Nairametrics showed that foreign exchange demand reached a 15-year high of $18.34 billion in the second quarter of 2026, with demand particularly strong for services and financial payments.
Demand for foreign currency can place pressure on the naira when buyers seek more dollars than the market can supply at prevailing exchange rates. The effect on the exchange rate also depends on the timing and availability of export proceeds, foreign investment inflows and other sources of dollar liquidity.
The latest depreciation, however, does not by itself identify the specific factors responsible for the movement on October 22.
Nigeria’s portfolio investment rose by 45% to $6.51 billion in the second quarter of 2026, while foreign exchange reserves increased by $12.76 billion year-on-year to $54.61 billion as of September 14.
These figures provide context for Nigeria’s external position, but they do not guarantee that the naira will strengthen in every trading session. Portfolio flows can change, while strong demand for foreign currency can continue to affect market pricing.
Foreign Reserves Remain Above Earlier Projection
Nigeria’s foreign exchange reserves stood at $54.61 billion as of September 14, above the CBN’s earlier projected year-end 2026 level of approximately $51.04 billion.
Reserves help the country meet external obligations and can support confidence in its ability to manage foreign exchange pressures. Their effect on the currency, however, depends on several factors, including the availability of foreign currency in the market, demand from importers and other buyers, and the policy framework governing the exchange-rate market.
The combination of higher reserves and a sharp daily depreciation illustrates why reserve levels alone do not provide a complete picture of currency performance.
Market participants will need to monitor subsequent exchange-rate data, transaction activity and foreign currency demand to assess whether the latest decline represents a temporary adjustment or a more persistent change in market conditions.
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