Dollar crunch widens gap between official and black market rates
By Aboki Forex —
The gap between Nigeria’s official and parallel foreign exchange markets widened further last week, signalling renewed pressure in the informal market despite continued gains in the country’s external reserves.
A widening parallel market premium is typically viewed as an indicator of excess demand for foreign exchange outside the formal banking system. While the current premium remains significantly below the wide gaps witnessed before the apex bank’s foreign exchange reforms, the recent increase points to growing demand pressures that could weigh on the naira if sustained.
Reserves up, but demand pressures grow
Nigeria’s external reserves have continued to rise, offering some buffer to the official market. However, demand for dollars in the parallel market has outpaced official supply, widening the spread between the two rates. Analysts say this reflects lingering confidence issues and limited access to forex through banks for many small businesses and individuals.
According to the apex bank, official remittance inflows have already tripled from approximately $600 million per month since the implementation of its foreign exchange reforms in late 2023. Despite this improvement, the parallel market premium has crept higher in recent weeks.
What traders are watching
Going forward, market traders and buyers will closely monitor whether rising reserves and stronger foreign exchange inflows can narrow the widening premium. If dollar demand in the parallel market continues to rise faster than official supply, the pressure on the naira could intensify despite the country’s improving external position.
For now, the gap between the official and black market rates remains a key signal of underlying forex stress in the economy.