Naira emerges among Africa’s strongest currencies despite Q2 market turmoil — World Bank

The naira was among Africa’s most resilient currencies in the second quarter of 2026, with its maximum depreciation capped at 2.6% despite widespread exchange rate pressures across the continent.

The World Bank disclosed this in its October 2026 Africa Economic Update, which assessed exchange rate movements across 22 African countries outside the CFA franc zone.

The report attributed the currency pressures largely to higher energy prices, geopolitical uncertainty, capital outflows and stronger demand for the US dollar, but said the impact varied significantly across economies.

Naira among Africa’s resilient currencies

The naira’s maximum depreciation between March and June was 2.6%, placing it among the better-performing currencies tracked by the World Bank during the period.

The World Bank said most of the monitored currencies depreciated in the second quarter compared with their end-February levels, before much of the pressure eased by August.

• “The escalation of the conflict in the Middle East initially exerted broad-based pressure on African currencies.”

Seven of the 22 currencies monitored recorded maximum depreciation of more than 5%, including those of the Democratic Republic of Congo, Ghana, Seychelles and South Africa.

• Ghana’s cedi recorded the sharpest decline among the highlighted currencies, falling by as much as 10%.
• South Africa, Lesotho, Namibia and Eswatini recorded maximum declines of up to 7.2%, while the Democratic Republic of Congo and Uganda fell by 6% and 5%, respectively.

The naira subsequently recovered 1.9% from its March-to-June low by August, putting it among the currencies that regained ground after the period of heightened pressure.

Naira strengthens from March weakness

Data from the Nigerian Foreign Exchange Market (NFEM) show the naira weakening to N1,425/$ on March 9 before recovering in subsequent months. It closed at N1,390.50/$ on March 10 and N1,387/$ on March 31.

The recovery continued through the second and third quarters, with the exchange rate moving below N1,370/$ in early August before strengthening further later that month.

• The naira closed at N1,365/$ on August 3 and N1,360.15/$ on August 12.
• By August 24, it had strengthened to N1,349.99/$, before closing at N1,335.50/$ on August 31.
• The currency closed at N1,329/$ on September 1 and reached N1,320/$ on September 7.
• It closed at N1,332.75/$ on October 7, after ending September 30 at N1,329.50/$.

The October 7 closing rate was N92.25 stronger than the March 9 close of N1,425/$, representing an appreciation of about 6.5% over that period. The movement reflects the naira’s recovery in the supplied daily closing-rate data, although it covers a longer period than the World Bank’s second-quarter depreciation measure.

Oil exports cushion naira pressure

The World Bank said differences in countries’ external positions and export structures helped determine how severely their currencies responded to the global shocks.

• Nigeria’s position as a major crude oil exporter provided some protection as higher oil prices increased export earnings and foreign exchange inflows, the lender noted.
• The World Bank noted that Angola also benefited from the increase in crude oil prices, while South Africa gained from stronger demand for gold and platinum.
• Energy-importing countries faced higher import bills as oil and other energy prices increased, raising demand for US dollars.
• Limited foreign exchange buffers and high debt-service obligations intensified pressure on some African currencies.

Capital reallocation away from emerging and frontier markets added to depreciation pressures as geopolitical uncertainty increased, the report stated.

Higher fertilizer and other agricultural input costs also contributed to imported inflation pressures.

The World Bank noted that currency depreciation can further increase fiscal vulnerabilities in countries with significant dollar-denominated debt, as the local-currency cost of servicing external obligations rises.

Naira rebounds as growth outlook improves

By August, the naira had recovered part of its earlier losses, while several other African currencies remained below their end-February positions.

• The cedi remained 2.5% weaker than its end-February level, while Uganda’s currency was down 3.1%. South Sudan recorded one of the largest remaining declines at 5.5%.
• Only 10 of the 22 currencies tracked remained weaker than their end-February positions by the end of August.
• Nigeria and Angola were among the economies where stronger crude oil receipts helped cushion exchange rate pressures.
• The World Bank said the currency response reflected both external shocks and existing domestic vulnerabilities.

The relative resilience of the naira came amid the World Bank’s projection of stronger economic growth for Nigeria.

Nairametrics earlier reported that the World Bank raised Nigeria’s 2026 economic growth forecast to 4.3% from 4.0% in 2025, with growth projected at 4.4% annually in 2027 and 2028.