Reported by Weng Patrick Atokor l Journalist at Weng Global
Nigeria’s naira showed greater resilience than several African currencies during the second quarter of 2026, limiting its maximum depreciation to about 2.6 per cent against the US dollar as heightened geopolitical tensions put pressure on foreign-exchange markets across the continent.
The assessment is contained in the World Bank’s October 2026 Africa Economic Update, which examined exchange-rate movements across 22 African countries outside the CFA franc zone during a period marked by renewed economic and financial uncertainty linked to the conflict in the Middle East.
The World Bank’s findings place Nigeria among the African economies whose currencies absorbed the external shock relatively better. Several currencies recorded substantially larger declines during the March-to-June period, with Ghana’s cedi suffering the sharpest depreciation among those monitored.
The cedi weakened by nearly 10 per cent, while the currencies of countries including Lesotho, Namibia, South Africa and Eswatini also experienced declines of more than 6 per cent at their weakest points during the period.
Naira’s Q2 Decline Was Relatively Limited
The World Bank said most of the countries for which daily exchange-rate data were available experienced currency depreciation during the second quarter compared with their end-February positions, before the conflict intensified.
Nigeria’s naira, however, recorded a maximum weakening of about 2.6 per cent between March and June, according to reporting on the World Bank assessment. That represented a considerably smaller decline than those recorded by several other major African currencies.
The comparison is significant because the period was characterised by a combination of higher energy prices, increased demand for US dollars, heightened geopolitical uncertainty and capital-market volatility.
For many African economies, particularly net energy importers, higher oil prices increased import costs and placed additional pressure on foreign-exchange reserves and domestic currencies.
Nigeria was exposed to the same global shock but had an important advantage: its position as a major crude-oil exporter.
Oil Exports Helped Cushion Nigeria
The World Bank’s assessment indicates that commodity-exporting economies were better positioned to withstand some of the pressure generated by the Middle East conflict.
Higher crude-oil prices increased export receipts for oil-producing countries, creating additional foreign-currency inflows. Nigeria, as one of Africa’s major oil exporters, benefited from that dynamic, helping to cushion pressure on the naira.
This does not mean that Nigeria was insulated from external shocks. Rather, stronger oil-related foreign-exchange inflows provided a buffer at a time when many countries were facing higher import bills and increased demand for dollars.
The World Bank has separately highlighted improvements in Nigeria’s external position, including stronger reserves and a larger current-account surplus. Its current Nigeria country assessment says the external position strengthened on higher oil exports and portfolio inflows, with the current-account surplus rising to $5 billion in the first quarter of 2026 from $1.4 billion in the fourth quarter of 2025. Gross reserves reached $51.9 billion at the end of July.
Middle East Conflict Put African Currencies Under Pressure
The currency movements came against the backdrop of the escalation of conflict in the Middle East.
According to the World Bank, the shock initially created broad-based pressure across African currencies. Rising energy prices increased the cost of imports, particularly for countries that depend heavily on imported fuel.
At the same time, uncertainty in global financial markets encouraged investors to move toward safer assets, putting pressure on emerging and frontier markets.
For countries with substantial dollar-denominated obligations, currency depreciation also increased the domestic-currency cost of servicing external debt.
The effects were therefore uneven across Africa.
Economies with relatively strong commodity-export earnings were in a better position to generate foreign currency, while countries heavily dependent on energy imports faced additional pressure.
Ghana’s Cedi Faced the Sharpest Pressure
Ghana recorded the most severe currency weakening among the currencies monitored by the World Bank during the period.
The cedi depreciated by nearly 10 per cent between March and June, substantially exceeding the naira’s maximum decline.
The currencies of Lesotho, Namibia, South Africa and Eswatini also experienced maximum depreciations of more than 6 per cent, while the Seychelles rupee, Democratic Republic of Congo franc and Ugandan shilling also came under significant pressure.
The comparison demonstrates that the impact of the global shock was not uniform across African economies.
Foreign-exchange buffers, commodity exposure, debt obligations, domestic economic policies and investor confidence all influenced how individual currencies responded.
Pressure Eased by August
The currency shock also began to moderate later in the year.
The World Bank said much of the pressure on African currencies had eased by the end of August, with only 10 of the currencies monitored remaining weaker than their end-February levels.
This suggests that the sharp movements recorded during the second quarter were not necessarily permanent.
For Nigeria, the broader improvement in foreign-exchange conditions has coincided with signs of greater macroeconomic stability.
The World Bank’s latest assessment says Nigeria’s reforms have improved inflation dynamics, strengthened external and fiscal positions and enhanced exchange-rate flexibility, although substantial challenges remain.
Naira Stability Comes Despite Economic Challenges
The naira’s relative performance should not be interpreted as evidence that Nigeria’s currency problems have been completely resolved.
The country continues to face significant inflationary, fiscal and structural pressures.
The World Bank says headline inflation declined sharply from 27.4 per cent in March 2025 to 15.1 per cent in February 2026, although inflation subsequently averaged 15.7 per cent between March and July, while food inflation reached 20.3 per cent in July.
The Central Bank of Nigeria’s monetary policy rate remained at 26.5 per cent, reflecting continued efforts to contain inflation and maintain macroeconomic stability.
For ordinary Nigerians, currency stability therefore remains only one part of the broader economic picture.
A relatively stable exchange rate can reduce uncertainty for importers, businesses and investors, but its benefits ultimately depend on whether improvements in macroeconomic conditions translate into lower prices, stronger household incomes, more investment and job creation.
World Bank Upgrades Nigeria’s Growth Outlook
The currency assessment comes as the World Bank has also raised its economic growth forecast for Nigeria.
In its October 2026 Africa Economic Update, the Bank projected Nigeria’s economy to grow by 4.3 per cent in 2026, up from an estimated 4.0 per cent growth in 2025. It expects growth to reach 4.4 per cent annually in 2027 and 2028.
The Bank attributed the improved outlook to greater macroeconomic stability, strengthening investor confidence and a gradual recovery in private investment.
Nigeria’s real GDP also grew by 4.43 per cent year-on-year in the second quarter of 2026, according to the National Bureau of Statistics, taking first-half growth to 4.16 per cent.
The World Bank’s latest country assessment says growth has been driven largely by services and stronger agricultural performance, although it cautions that economic expansion remains insufficient to create enough productive jobs or materially reduce poverty.
What the Naira’s Resilience Means
The naira’s relatively limited depreciation during the second-quarter shock offers evidence that Nigeria’s external position has become more capable of absorbing some international pressures.
Improved foreign-exchange liquidity, higher reserves, oil export receipts and reforms to the foreign-exchange market have all contributed to a more stable macroeconomic environment.
However, the resilience also highlights Nigeria’s continuing dependence on oil.
Higher crude prices can provide valuable foreign-exchange earnings, but reliance on oil leaves the economy exposed when global energy prices fall or production is disrupted.
For Nigeria to achieve more durable currency stability, the country will need to strengthen non-oil exports, improve productivity, attract sustainable long-term investment and reduce structural vulnerabilities.
The World Bank has repeatedly stressed the importance of maintaining credible monetary and fiscal policies, strengthening investment and improving the business environment.
Why It Matters for Nigerians and Africa
The naira’s performance matters beyond foreign-exchange markets.
A more stable currency can make it easier for businesses to plan, reduce uncertainty around imported inputs and improve investor confidence. It can also help the government and private sector manage foreign-currency obligations more predictably.
But exchange-rate stability alone does not automatically translate into improved living standards.
The World Bank continues to warn that Nigeria faces high poverty and weak real-income growth despite improvements in macroeconomic stability. Its latest country assessment estimates that 69.6 per cent of Nigerians lived below the lower-middle-income poverty line of $4.20 a day in 2025, while 50.8 per cent, or about 123 million people, were living in extreme poverty under the measure cited by the Bank.
The challenge for policymakers is therefore to turn improved macroeconomic stability into broader economic gains that are felt by households and businesses.
What Happens Next
The immediate outlook for the naira will depend on several factors, including crude-oil prices, oil production, foreign-exchange liquidity, investor flows, inflation, monetary policy and developments in global financial markets.
Nigeria’s stronger external position provides a buffer, but maintaining that resilience will require continued economic reforms and careful management of fiscal and monetary policy.
The World Bank’s broader October outlook remains cautiously positive. It projects Sub-Saharan African growth at 4.3 per cent in 2026, up from 4.1 per cent in 2025, while warning that geopolitical tensions, energy-price shocks, tighter financial conditions and other risks could still disrupt the recovery.
For Nigeria, the latest currency data therefore offer an encouraging sign, but not a reason for complacency.
The naira weathered a major external shock better than several African currencies during Q2 2026. The larger test will be whether that relative stability can be sustained while Nigeria continues the harder task of lowering inflation, creating productive jobs, reducing poverty and building an economy less vulnerable to swings in global oil markets.
Weng Global – Stories beyond borders
Sources
- World Bank — Africa Economic Update, October 2026: Building AI-Readiness.
- World Bank — Economic Growth in Sub-Saharan Africa Gains Momentum Despite Global Uncertainty, October 6, 2026.
- World Bank — Nigeria country economic overview and latest macroeconomic indicators.
- World Bank — Nigeria Development Update, April 2026.
- Reuters — World Bank raises Africa’s 2026 growth forecast, October 6, 2026.
