Naira Strengthens to Seven-Month High in Parallel Market

The Naira continued its upward momentum, reaching its highest level in seven months in the parallel market, appreciating to N1,500 per dollar from N1,530 per dollar last weekend. This marks the first time since June 21, 2024, that the Naira has traded below N1,500 per dollar in the parallel market, when it stood at N1,495 per dollar.

Despite the gains in the parallel market, the Naira depreciated in the Nigerian Foreign Exchange Market (NFEM), closing at N1,504 per dollar. Data from the Central Bank of Nigeria (CBN) showed that the indicative exchange rate rose from N1,502.5 per dollar last weekend, representing a slight depreciation of N1.5.

For the first time in a long while, the parallel market exchange rate was lower than the official market rate, with the gap narrowing to minus N4 per dollar from N27.5 per dollar the previous week. Analysts at CardinalStone Research confirmed the development, noting that the FMDQ FX rate weakened by 0.17% to N1,503.63 per dollar, while the parallel market rate strengthened by 0.67% to N1,500 per dollar.

Since the start of the year, the Naira has appreciated by 9.4% in the parallel market and 2.2% in the official market, climbing from N1,655 per dollar and N1,538.5 per dollar, respectively, at the close of 2024. Currency traders attribute the Naira’s steady appreciation to an improved supply of dollars, despite sustained demand.

A currency dealer, Mr. Yinusa Sadiq, highlighted that increased dollar supply from banks and Bureau de Change operators has made access to foreign currency easier. “The Naira has been appreciating since last week following increased dollar supply, even with strong customer demand. The dollar was traded today between N1,510 and N1,500. I bought a dollar at N1,490 today,” he said.

Another trader, Mr. Rasaq Bello, projected further gains for the Naira, expecting it to remain stable between N1,490 and N1,500 per dollar as long as dollar supply continues to rise. “If the supply trend persists, I see the foreign exchange rate stabilizing in this range throughout the week,” he noted.

Analysts at Cowry Asset Management Limited echoed similar sentiments, predicting a relatively stable Naira in the coming days unless market conditions shift significantly. “This week, we expect the Naira to trade within a stable range, provided there are no major disruptions. Market dynamics will continue to shape dollar supply and demand, impacting the Naira’s performance across exchange segments,” they stated.