Naira Steady in Official Market but Weakens in Parallel Market as Gap Widens

The gap between Nigeria's official and parallel foreign exchange markets widened last week, raising concerns about demand pressure on the naira. Data from the Central Bank of Nigeria (CBN) showed the naira closed the week at N1,380.18 to the dollar in the official market, broadly unchanged from the previous week.

In the parallel market, however, the currency weakened to N1,413 per dollar, down from N1,400 the week before, a depreciation of N13. The divergence pushed the premium between the two markets to N32.82, or 2.38 per cent, compared with N20.38, or 1.48 per cent, a week earlier.

Reserves Hit $51.743 Billion as Dollar Demand Grows

The widening gap points to growing demand for dollars outside the formal banking system, typically a sign that buyers are struggling to access sufficient foreign exchange through official channels. Despite the pressure in the informal market, Nigeria's gross external reserves continued to rise, reaching $51.743 billion and edging closer to the $52 billion mark.

The improvement has been driven by higher crude oil export earnings, increased foreign portfolio investment inflows, and CBN measures aimed at boosting liquidity in the foreign exchange market. A larger reserves buffer generally gives the CBN more room to intervene and support exchange rate stability.

However, analysts at MoneyAfrica have cautioned that reserve growth alone may not be enough to ease parallel market pressure if dollar demand continues to exceed official supply.

CBN Targets $1 Billion Monthly Remittances by End of 2026

The CBN has set a target of raising official diaspora remittance inflows to $1 billion per month by the end of 2026. The apex bank said remittances through formal channels have already tripled from about $600 million per month since it introduced sweeping foreign exchange reforms in late 2023.

That increase of roughly 200 per cent has been driven by the harmonisation of exchange rates, the removal of multiple exchange rate windows, and efforts to channel funds from Nigerians abroad through regulated financial institutions. Market watchers will be closely monitoring whether stronger reserves and growing remittance flows can close the widening premium between the two markets.

What This Means for the Naira and Nigerian Businesses

If demand in the parallel market continues to outpace what official channels can supply, analysts warn the naira could face sustained pressure despite Nigeria's improving external position. The widening premium signals that businesses and individuals relying on the parallel market for dollar access may continue to face higher costs, which could feed into consumer prices and inflation expectations in the weeks ahead.