The Naira continued its upward trajectory in the parallel market, appreciating to N1,500 per dollar yesterday from N1,530 per dollar recorded over the weekend.
This marks the highest level the currency has reached in the last seven months.
The last time the Naira traded below N1,500 per dollar in the parallel market was on June 21, 2024, when it stood at N1,495 per dollar.
However, in the Nigerian Foreign Exchange Market (NFEM), the Naira slightly depreciated, closing at N1,504 per dollar. Data from the Central Bank of Nigeria (CBN) showed that the indicative exchange rate for the local currency weakened to N1,504 per dollar from N1,502.5 per dollar recorded last weekend, reflecting a marginal N1.5 depreciation.
For the first time in a long period, the parallel market exchange rate has dropped below the official market rate.
Consequently, the gap between the two markets narrowed significantly to negative N4 per dollar, compared to the N27.5 per dollar difference observed last Friday.
Confirming this trend, analysts at CardinalStone Research noted in their forex market review that, “The FMDQ FX rate depreciated by 0.17 percent to N1,503.63 per dollar, while the parallel market rate appreciated by 0.67 percent to settle at N1,500 per dollar.”
So far this year, the Naira has appreciated by 9.4 percent in the parallel market and 2.2 percent in the official market, improving from N1,655 per dollar and N1,538.5 per dollar, respectively, recorded at the end of last year.
Currency traders attribute the Naira’s appreciation to an increase in dollar supply, despite sustained demand.
Speaking on the development, currency dealer Yinusa Sadiq said: “The Naira has been gaining strength since last week due to an increase in dollar supply, even though demand remains high.
“There is now easier access to dollars through banks and Bureau de Change operators. With both buying and selling activities ongoing, the dollar traded today between N1,510 and N1,500. I personally purchased a dollar at N1,490.”
Another trader, Rasaq Bello, projected further appreciation of the Naira, anticipating stability within the N1,490 to N1,500 per dollar range if the dollar supply continues to rise.
“If the supply of dollars keeps increasing, I expect the exchange rate to stabilize between N1,490 and N1,500 per dollar this week,” he said.
Similarly, in their foreign exchange outlook, analysts at Cowry Asset Management Limited predict that the Naira will maintain relative stability against the dollar.
“This week, we expect the Naira to trade within a stable range, provided there are no major disruptions in the market. Market dynamics will continue to influence the supply and demand for the dollar, shaping the currency’s performance across different exchange segments,” the analysts stated.