Naira Rises to N1,375/$ in Parallel Market as Reserves Hit $54.674bn
By Aboki Forex —
The naira appreciated to N1,375 per dollar in the parallel market, up from N1,383 on Tuesday. The local currency also gained in the official market, closing at N1,328 per dollar in the Nigerian Foreign Exchange Market, NFEM.
Data from the Central Bank of Nigeria, CBN, showed the indicative exchange rate fell to N1,328 per dollar from N1,331 per dollar on Tuesday, a N3 appreciation.
Gap Between Markets Narrows
The margin between the parallel and official markets narrowed to N47 per dollar from N52 per dollar on Tuesday. That is a N5 squeeze in the spread in a single day.
Turnover in the NFEM rose sharply. The value of interbank turnover increased by 181.5 percent to $279.2 million from $99.2 million on Tuesday. The jump in volumes shows more dollars are being traded through the official window.
Reserves Keep Climbing
The nation's external reserves continue to rise, hitting $54.674bn on Friday September 17th. That build-up is boosting the outlook for the naira.
The outlook for the naira remains positive, with prospects of further appreciation in both markets in coming weeks.
What It Means
A narrower gap between the parallel and official rates reduces the incentive for round-tripping and gives importers and businesses a more predictable rate to plan around. Higher interbank turnover also signals that more supply is flowing through the formal market instead of the street. If the reserves keep rising and the spread keeps closing, businesses that source dollars for imports could see their costs ease in the near term.