Expert Projects New Exchange Rate, 10 Key Factors That Will Influence Naira Performance In 2026

• The naira could strengthen in 2026 if crude oil production rises and export earnings improve
• Higher global oil prices and growth in non-oil exports could also support the currency
• Foreign investment, diaspora remittances, strong FX reserves, and better fiscal and monetary policies are expected to boost confidence in the naira

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

Nigeria’s naira could experience a mixed performance in 2026, with analysts pointing to a range of domestic and external factors that may either support currency stability or trigger renewed pressure.

Factors that could strengthen the naira

Analysts say several developments could help boost the naira’s value in 2026:

1. Higher crude oil production and improved oil exports – Increased output would boost foreign exchange earnings and improve dollar liquidity in the market.
2. Rising global oil prices – Stronger oil prices would lift export revenues and strengthen the Central Bank of Nigeria’s ability to stabilise the FX market.
3. Growth in non-oil exports – Expansion in agriculture, manufacturing, and services could provide sustainable sources of foreign exchange.
4. Increased foreign portfolio and direct investment inflows – Stronger investor confidence and policy reforms could raise dollar supply and boost demand for naira-denominated assets, BusinessDay reports.
5. Higher diaspora remittances – Inflows from Nigerians abroad would increase foreign currency supply and ease pressure on the naira.
6. Stronger foreign exchange reserves – Healthy reserves allow the CBN to manage volatility and defend the naira.
7. Improved FX market transparency and exchange rate reforms – Narrowing the gap between official and parallel market rates reduces speculation.
8. Effective liquidity management by the CBN – Controlling money supply and avoiding excess naira liquidity supports currency stability.
9. Controlled inflation and stable monetary policy – Helps preserve purchasing power and maintain investor confidence.
10. Improved fiscal discipline – Lower budget deficits and reduced borrowing ease inflationary pressures and support long-term stability.

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Factors that could weaken the naira

Despite potential support, several risks could put the naira under pressure in 2026:

1. Falling global oil prices – Reduces foreign exchange inflows and weakens the currency.
2. Decline in crude oil production or supply disruptions – Sharp cuts in output limit dollar earnings.
3. High import demand – Large imports of fuel, machinery, and food increase pressure on foreign currency supply.
4. Persistent inflationary pressures – Erodes purchasing power and encourages preference for foreign currencies.
5. Large fiscal deficits and rising public debt – Undermine confidence and heighten exchange rate risks.
6. Declining foreign exchange reserves – Limits the CBN’s ability to intervene during periods of stress.
7. Weak investor confidence or capital flight – Policy uncertainty or global risk aversion can trigger outflows.
8. Political or security uncertainty – Instability can deter investment and strain the currency.
9. External shocks and stronger US dollar – Tighter global financial conditions reduce capital inflows into Nigeria.
10. Increased FX volatility under a free floating exchange regime – Exposes the naira to short-term swings without sufficient buffers.

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Expert predict new exchange rate

Earlier, Legit.ng reported that Yemi Kale, Chief Economist at the Africa Export-Import Bank (Afreximbank), made the projection while delivering the keynote address at the FirstBank Nigeria Economic Outlook 2026.

He projected that naira will trade between N1,350 and N1,450 per US dollar in 2026.

Under a baseline scenario, Kale expects the naira to remain under pressure but avoid sharp collapse, trading around N1,313 per dollar by June and approximately N1,340 by December 2026.

Proofreading by James Ojo, copy editor at Legit.ng.

Source: Legit.ng