Naira Trades at N1,400/$ in Parallel Market as FX Gap Widens

The naira exchanged at N1,400 per dollar in the parallel market on Monday, driven by sustained demand for foreign currency outside official channels. Buyers quoted the rate at N1,395 per dollar for purchases, reflecting continued pressure on the black market.

In the official market, the naira strengthened last week, closing at N1,362.21 per dollar. This was an improvement from the previous week's close of N1,373.25. During the week, the currency hit N1,357.26 per dollar, its best level in nearly a month.

The rally in the official window was supported by increased offshore inflows from Open Market Operations auctions. These inflows helped offset domestic demand pressures. However, the parallel market moved in the opposite direction. The naira weakened by N23 to N1,398 per dollar over the same period.

As a result, the gap between the two markets widened sharply. The premium rose to N35.79, or 2.63 per cent, compared to just N1.75, or 0.13 per cent, a week earlier.

Unmet Demand Fuels Parallel Market Activity

Despite Nigeria's external reserves crossing the $50 billion mark, structural challenges remain. Bureau de Change operators say many legitimate dollar requests are still not met in the official market. Delays in allocation and mismatches in supply timing push participants to the parallel market.

Yusuf Danladi, a BDC operator in Ajah, said the widening gap reflects ongoing segmentation in the FX system. He noted that recent reforms and increased inflows have improved conditions in the official market, but transmission to end-users remains uneven.

“While reforms and inflows have supported stability in the formal window, transmission to end-users remains uneven,” Danladi said. He warned that reliance on the parallel market, even with modest premiums, points to underlying pressures that could persist unless access to foreign currency becomes more efficient.

CBN Injects $81 Million into BDCs

In a related development, the Central Bank of Nigeria released $81 million to Bureau De Change operators. This followed an earlier $18 million injection aimed at supporting the naira as volatility resurfaced in the official market. Economists said the allocation should help improve market confidence and provide short-term stability.

Market observers remain cautiously optimistic about the naira, citing stronger external reserves, sustained inflows, and relatively healthy liquidity in the official market. But the persistent gap between official and parallel rates suggests that full FX access remains a challenge for many businesses and individuals.