Naira Gains in Official and Parallel Markets as FX Turnover Jumps 226% to $80.58m

The naira strengthened against the US dollar in both the official and parallel markets on Tuesday, helped by a sharp rise in interbank foreign exchange turnover and improved dollar liquidity.

Data from the Nigerian Foreign Exchange Market (NFEM) showed the naira appreciated by 0.06% to close at N1,330.47 per dollar, compared with N1,331.33 in the previous session. The dollar traded within a range of N1,327.50 to N1,331.50 during the day, a sign of relatively stable conditions in the official market.

Interbank turnover jumps 226%

Central Bank of Nigeria data showed interbank FX turnover rose by about 226% to $80.58 million, up from $24.73 million in the preceding session.

That jump matters for businesses and banks. Higher liquidity generally gives authorised market participants better access to foreign currency and can ease pressure on the naira.

In the parallel market, traders quoted the dollar at about N1,375. That represents an appreciation of roughly 0.36% and cut the gap between the official and street rates to approximately N45 per dollar, from about N49 previously.

The narrowing spread is significant. A wide gap between both markets often fuels speculation and pushes individuals and businesses towards unofficial FX channels.

For Nigerians buying dollars on the streets, the rate is still higher than the official market price, but the difference has continued to shrink.

Pound and euro also under pressure

The naira's gains were not limited to the dollar. An FX market update from AIICO Capital put the official exchange rate for the British pound at N1,760.62, while the euro was quoted at N1,509.56.

In the parallel market, the naira strengthened against the pound to about N1,855, while the euro traded around N1,550.

Sterling has been a thorn in the side of importers for months. Earlier reporting showed the pound trading around N1,786, a major improvement from periods when it exchanged above N2,000.

Reserves and oil prices in focus

The latest movement comes as Nigeria's external reserves continue to improve, giving the CBN more room to manage volatility in the FX market. Gross external reserves have risen to about $54.91 billion, compared with $45.50 billion at the beginning of the year.

Global commodity prices could also shape Nigeria's foreign exchange position, since crude oil remains a major source of dollar earnings.

Oil traded around $100.19 per barrel, while US West Texas Intermediate hovered near $95 per barrel.

Gold rose 0.38% to about $4,190.30 an ounce, recovering some of its losses after falling to a seven-week low on Monday.

For the naira, traders will be watching whether stronger FX liquidity and rising reserves can sustain the recent appreciation and further close the gap between official and parallel-market rates.