The Nigerian naira was among the more resilient African currencies during the second quarter of 2026, according to the World Bank, as currencies across the continent faced renewed pressure from geopolitical tensions, higher energy prices and tighter global financial conditions.
The assessment comes amid a challenging global economic environment in which disruptions linked to the conflict in the Middle East pushed up energy prices and created additional pressure on inflation, exchange rates and economic activity in developing economies.
The World Bank has said that the broader Sub-Saharan African economy remained resilient despite geopolitical tensions, climate shocks, declining development assistance and fiscal pressures. In its latest Africa Economic Update, released on October 6, the bank projected regional growth to rise from 4.1 per cent in 2025 to 4.3 per cent in 2026. (World Bank)
Nigeria was among the countries whose growth outlook was upgraded, with the World Bank pointing to improvements in macroeconomic resilience and economic management.
The naira’s reported performance is significant because the currency has undergone substantial reforms in recent years, including changes to Nigeria’s foreign-exchange market and efforts by authorities to strengthen external reserves and improve liquidity.
The World Bank’s latest assessment of Nigeria noted that the country’s external position had strengthened, supported by higher oil exports and portfolio inflows. Nigeria recorded a current-account surplus of $5 billion in the first quarter of 2026, compared with $1.4 billion in the fourth quarter of 2025, while gross foreign-exchange reserves reached $51.9 billion at the end of July. (World Bank)
These developments have provided some support for the naira at a time when several African currencies and emerging-market currencies have been exposed to external shocks.
The global environment during the period was particularly challenging. The World Bank reported that the conflict in the Middle East triggered major disruptions to energy markets, with higher oil prices feeding into inflationary pressures and increasing uncertainty across economies. (World Bank)
The bank’s April Commodity Markets Outlook projected energy prices to rise sharply in 2026, while warning that prolonged geopolitical disruptions could further increase oil prices and inflation in developing economies. (World Bank)
For oil-producing economies such as Nigeria, higher crude prices can provide stronger export earnings and improve the supply of foreign currency. However, higher energy prices can also create inflationary pressures and increase the cost of imports, meaning the overall impact on the economy is complex.
Nigeria’s improved external position has therefore become an important factor in the performance of the naira.
The World Bank’s April 2026 Nigeria Development Update said Nigeria had made meaningful progress in restoring macroeconomic stability following the implementation of economic reforms. It highlighted easing inflation, stronger external and fiscal positions and continued economic growth, while also warning that household incomes had yet to recover fully and poverty remained high. (World Bank)
The bank has nevertheless stressed that maintaining exchange-rate flexibility and credible macroeconomic policies remains important for sustaining the recent gains.
Despite the reported resilience of the naira, the currency continues to face significant domestic challenges. Inflation, foreign-exchange demand, import costs and household purchasing power remain important factors affecting Nigerians and businesses.
The World Bank recently noted that Nigeria’s headline inflation had fallen substantially from earlier levels, although inflationary pressures remained elevated during parts of 2026. It also warned that reliance on short-term portfolio flows remains a vulnerability for the country’s external position. (World Bank)
The naira’s relative performance during the second quarter should therefore not be interpreted as an indication that all exchange-rate pressures have disappeared.
Rather, the development points to an improvement in Nigeria’s macroeconomic resilience at a time when African economies were confronting a difficult external environment.
The World Bank said the wider African region continued to demonstrate resilience despite the shocks, but warned that higher global fuel, fertiliser and food prices could reverse some of the progress made on inflation. Median inflation in Sub-Saharan Africa is projected to increase from 3.7 per cent in 2025 to 5.5 per cent in 2026. (World Bank)
For Nigeria, sustaining the naira’s relative stability will depend on continued improvements in foreign-exchange liquidity, stronger reserve accumulation, stable oil production and exports, credible monetary and fiscal policies, and continued progress with economic reforms.
The World Bank’s assessment consequently provides a positive signal about the naira’s performance during the quarter, while highlighting the need for Nigeria to consolidate its recent macroeconomic gains in an uncertain global environment.
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