Naira Strengthens to N1,400/$ in Parallel Market, Gap with Official Rate Narrows
By Aboki Forex —
The naira appreciated to N1,400 per dollar in the parallel market yesterday, gaining from N1,407 per dollar on Monday. However, the currency weakened slightly in the official Nigerian Foreign Exchange Market (NFEM), where it fell to N1,365 per dollar from N1,364 per dollar.
Parallel market gains while official rate slips
Data from the Central Bank of Nigeria (CBN) showed that the indicative exchange rate in the NFEM rose to N1,365 per dollar on Tuesday from N1,364 per dollar on Monday, recording a N1 depreciation for the naira. In the parallel market, dealers quoted the dollar at N1,400, a N7 improvement from the previous day.
As a result, the spread between the two rates narrowed sharply. The margin stood at N35 per dollar yesterday, down from N43 per dollar on Monday. A tighter gap between the official and parallel markets is often seen as a sign of reduced arbitrage pressure and improved forex liquidity.
Interbank turnover drops sharply
Despite the narrowing spread, trading activity in the official window declined. The interbank turnover at the NFEM fell by 159.9 percent to N102.95 million yesterday from N39.6 million on Monday. The sharp drop in turnover suggests lower dollar supply through the official channel, even as the parallel market showed modest strengthening.
Market participants attributed the parallel market gains to increased remittance inflows and reduced demand from end-users. Traders expect the naira to trade within a tight range in the coming days as the CBN continues to manage liquidity.
What this means for the naira and consumers
The narrowing gap between the official and parallel rates is a positive signal for currency stability. For Nigerian businesses that rely on the parallel market for dollar access, the N1,400/$ rate offers slight relief from the volatility seen in recent weeks. Consumers importing goods priced in dollars may also benefit marginally, though the official rate remains the benchmark for most government transactions. Sustained convergence will depend on steady dollar inflows and CBN interventions.