Mirage or Measurement? Putting Nigeria’s Stock Market to the Dollar Test

Nigeria's stock market has achieved remarkable gains in dollar terms, challenging previous criticisms that its performance was an "optical illusion" driven by currency devaluation. The Nigerian Exchange All-Share Index became the world's best-performing equity index in dollar terms by July 10, 2026, with year-to-date gains of approximately 67%. While it later ranked third globally by August 14, its strong performance in dollar terms is a significant turnaround.

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Devalue the naira by two hundred per cent, and every dollar-linked asset automatically “becomes” three times more valuable in local currency. The owners become naira billionaires on paper. No factory opens. Nobody is hired. Balance-sheet wealth, not pocket wealth. Portfolio racketeering dressed up as prosperity.

This performance directly counters arguments that the rally was merely "currency arithmetic," where devaluing the naira would artificially inflate the value of dollar-linked assets in local currency. Such arguments suggested that owners became "naira billionaires on paper" without genuine economic growth or job creation. The current market trend, however, indicates otherwise.

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If the rally is currency arithmetic, then strip out the currency and the gains should disappear.

In contrast to 2023 and 2024, when local-currency gains in Nigerian equities were nullified by currency depreciation, the naira has shown appreciation in recent years. It gained roughly 4% against the dollar in 2026 and approximately 5.9% in 2025. This currency movement now contributes positively to international returns, rather than diminishing them. This shift is attributed to improved foreign exchange liquidity, higher reserves, and a narrower parallel-market spread.

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A dollar return is a post-translation figure. It is what survives after the exchange rate has finished with you. Depreciation does not flatter a dollar return, it destroys one.

The sustained dollar returns suggest that the market's growth is not solely a product of devaluation but reflects a more robust economic environment. The Nigerian Exchange's performance, measured in dollars, is a crucial indicator that survives the exchange rate's impact, demonstrating a genuine increase in value for international investors.

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The naira has appreciated roughly four per cent against the dollar in 2026, after appreciating about 5.9 per cent across 2025, supported by better foreign exchange liquidity, higher reserves and a narrower parallel-market spread.