Naira Among Africa’s Most Resilient Currencies – World Bank

The Nigerian naira showed comparatively limited weakness against the US dollar during the second quarter of 2026, placing it among the African currencies that weathered a period of significant foreign exchange pressure, according to the World Bank.

The assessment is contained in the bank’s October 2026 Africa Economic Update, which examined currency movements across 22 African countries outside the CFA franc zone.

Global shocks put African currencies under pressure

African currencies faced renewed pressure during the period as rising energy costs, geopolitical tensions, capital movements and stronger demand for the US dollar affected foreign exchange markets.

The World Bank noted that the escalation of conflict in the Middle East initially triggered widespread pressure on currencies across the continent.

However, the effects were not uniform. Countries with stronger external positions, higher export earnings or greater exposure to commodities were generally better placed to absorb the shocks.

Seven of the 22 currencies monitored recorded maximum depreciation of more than 5 per cent during the period.

Ghana’s cedi was among the hardest hit, losing as much as 10 per cent, while currencies in South Africa, Lesotho, Namibia and Eswatini recorded declines of up to 7.2 per cent. The Democratic Republic of Congo and Uganda also recorded maximum depreciations of 6 per cent and 5 per cent respectively.

Naira records relatively modest decline

Against this regional backdrop, the naira recorded a maximum depreciation of about 2.6 per cent, according to the World Bank’s assessment.

The Nigerian currency subsequently regained some of the ground lost during the period. By August, it had recovered 1.9 per cent from its March-to-June low, putting it among the African currencies that had begun to reverse earlier losses.

The movement is also reflected in Nigerian Foreign Exchange Market (NFEM) data supplied for the period.

The naira weakened to N1,425 per US dollar on March 9, 2026, before beginning a gradual recovery. It closed March at N1,387/$ and continued strengthening over the following months.

By August 3, the exchange rate had improved to N1,365/$, reaching N1,335.50/$ by the end of the month.

The naira maintained much of that momentum in September, closing the month at N1,329.50/$. It stood at N1,332.75/$ on October 7, representing an appreciation of approximately 6.5 per cent from its March 9 level of N1,425/$.

The longer-term movement, however, covers a broader period than the World Bank's specific second-quarter assessment.

Oil earnings provide some protection

Nigeria’s position as a major crude oil exporter was identified as one factor helping to cushion exchange rate pressures.

According to the World Bank, higher crude oil prices can strengthen export earnings and foreign exchange inflows for oil-producing economies. Nigeria and Angola were among the countries that benefited from this dynamic.

South Africa also received support from stronger demand for commodities such as gold and platinum.

The situation was different for countries that depend heavily on imported energy. Rising oil prices increased their import costs and consequently raised demand for US dollars.

External pressures remain a concern

Beyond commodity prices, the World Bank pointed to several factors that contributed to currency volatility across the continent.

These included:

• Capital outflows from emerging and frontier markets.
• Limited foreign exchange reserves in some economies.
• High external debt-service obligations.
• Increased demand for the US dollar amid geopolitical uncertainty.
• Higher fertiliser and agricultural input costs, which contributed to imported inflation.

Currency depreciation can also create additional pressure for governments with substantial dollar-denominated debt. As the local currency loses value, more domestic currency is required to meet foreign debt obligations.

Several African currencies remained weaker

By the end of August, only 10 of the 22 currencies tracked by the World Bank remained below their end-February positions.

Ghana’s cedi was still 2.5 per cent weaker than its end-February level, while Uganda’s currency had declined by 3.1 per cent. South Sudan recorded a remaining depreciation of 5.5 per cent.

The naira’s recovery therefore formed part of a broader but uneven shift in currency performance across the continent.

Nigeria’s growth outlook also improves

The naira’s recovery comes alongside an improved economic growth projection for Nigeria.

The World Bank raised its forecast for Nigeria’s 2026 economic growth to 4.3 per cent, compared with 4.0 per cent in 2025. It also projected growth of 4.4 per cent for both 2027 and 2028.

The currency figures nevertheless underline the continuing importance of foreign exchange inflows to Nigeria’s economic stability.

For Nigeria, oil export receipts remain an important buffer against external shocks, while sustained exchange-rate stability will depend on broader economic conditions, foreign exchange supply and the resilience of the country’s external position.

Source: Nairametrics