Convergence and Confidence: The Naira’s February Rally and the BDC Reset

LAGOS — The Nigerian Naira reached a significant milestone during the week ending February 20, 2026, achieving its strongest level of price convergence in two years. Driven by a surge in external reserves and a strategic policy shift by the Central Bank of Nigeria (CBN), the gap between the official and parallel market rates effectively collapsed, rewarding patient savers and punishing currency speculators.

By Friday, the parallel market closed at ₦1,340/$, slightly stronger than the official Nigerian Foreign Exchange Market (NFEM) rate of ₦1,346.32/$.

The Numbers: A Week of Appreciation

The week was characterized by “speculative flight,” as dollar holders offloaded positions to avoid further losses from the Naira’s steady climb.

• Official Market (NFEM): The Naira gained 0.7% week-on-week, moving from ₦1,355.42 the previous Friday to ₦1,346.32.

• Parallel Market: The currency saw a sharper 5.97% appreciation, gaining ₦80 over the week to close at ₦1,340.

• The Convergence: On Thursday, February 19, the spread between the two markets narrowed to just 0.29%, the closest the rates have been since early 2024.

War Chest: External Reserves Hit 3-Year High

Nigeria’s ability to defend the local currency has been significantly bolstered by an aggressive accretion in foreign reserves. As of February 17, 2026, external reserves climbed to $48.50 billion.

Factors Driving the $48bn+ Buffer:

1. Oil & Gas Inflows: Sustained production levels near 1.46 million barrels per day and stable global prices.

2. Diaspora Remittances: Record-high inflows following the stabilization of the remittance corridors in late 2025.

3. Multilateral Support: Successful Eurobond issuances and drawdowns from World Bank facilities in January 2026.

The New BDC Era: 82 Licensed Gatekeepers

A pivotal factor in the current rally is the formal reintegration of Bureaux De Change (BDCs) into the official market. Following a massive regulatory overhaul in late 2025, the CBN has moved from a “quantity” to a “quality” model for retail FX.

The New Rules of Engagement:

• The “Elite 82”: Only 82 BDCs met the rigorous new capital requirements (₦2 billion for Tier 1; ₦500 million for Tier 2) and were fully licensed to operate effective November 27, 2025.

• Liquidity Cap: Each licensed BDC can purchase up to $150,000 weekly from authorized dealer banks.

• Strict Utilization: BDCs must deploy purchased funds within 24 hours; holding “open positions” to speculate on future rate hikes is strictly prohibited.

• Transparency: Cash transactions are capped at 25%, with the remainder handled through traceable electronic financial channels.

“Data should inform decisions before they are made, not be used to justify them after the fact,” noted analyst Ganiyat Abe earlier this week, echoing the sentiment that the CBN’s data-led intervention is finally anchoring market expectations.

Summary: FX Market Snapshot