The Nigerian naira recorded mixed performances across foreign exchange markets on Tuesday, appreciating in the parallel market while depreciating at the official Nigerian Foreign Exchange Market (NFEM).
In the parallel market, the naira gained marginally, trading at N1,518 per dollar compared to N1,520 per dollar recorded on Monday. The improvement, though slight, reflects continued volatility in the informal segment, where supply and demand pressures largely dictate pricing outside official regulation.
However, at the NFEM—the official window supervised by the Central Bank of Nigeria (CBN)—the naira slipped against the US dollar. Data released by the CBN showed the exchange rate closed at N1,493.2 per dollar, a depreciation of ₦1.8 from the N1,491.4 per dollar recorded the previous day.
This divergence between the official and parallel markets left the exchange rate gap narrower. As of Tuesday, the margin between the two markets stood at N24.8 per dollar, down from N28.6 per dollar on Monday. Analysts say such narrowing spreads often reflect either adjustments in supply flows at the official window or shifts in demand at the parallel market.
Market watchers also point out that while the naira’s appreciation at the parallel market is positive, the depreciation at the official market signals persistent liquidity challenges and investor uncertainty over forex inflows. They note that Nigeria’s ability to sustain exchange rate stability will depend on improvements in dollar supply from oil revenues, remittances, and foreign investments.
The CBN has in recent months intensified measures to close the gap between the parallel and official markets. These include policy adjustments to unify exchange rates, as well as efforts to increase transparency in the forex market. Still, the naira remains under pressure, driven by high demand for dollars and limited supply, particularly for imports and business transactions.
Economists believe that unless the country strengthens its non-oil exports and boosts investor confidence, the local currency will continue to face swings across different market segments. For now, the slight convergence in exchange rates offers some relief but highlights the fragile balance facing Nigeria’s forex system.
The developments underscore the broader challenge confronting policymakers as they seek to stabilize the naira and restore confidence in the economy amid inflationary pressures and fluctuating global oil prices.
