Naira holds firm at official window as parallel market weakness deepens

The naira closed mid-week trading at N1,423 per dollar in Nigeria’s official foreign exchange market, continuing a mixed trend that contrasts sharply with persistent weakness in the parallel market.

Data from the Central Bank of Nigeria (CBN) indicate that while the official market remains relatively stable, demand pressures continue to mount outside the regulated window, widening the divide between both segments of the FX market.

At the Nigerian Foreign Exchange Market (NFEM), the naira traded at N1,420.5/$ on Monday, strengthened slightly to N1,420/$ on Tuesday, before depreciating to N1,423/$ on Wednesday.

Last week, the naira opened at N1,425/$ and strengthened gradually to close at N1,417.95/$, reflecting intermittent gains at the official window.

In contrast, the parallel market opened at N1,483/$ on Monday, maintained the same rate on Tuesday, and depreciated further to N1,486/$ on Wednesday.

The gap between the official and parallel market rates stood at N63, narrowing from N73 recorded last week. However, the margin remains one of the widest since February 2025, highlighting persistent distortions in Nigeria’s currency market.

On a year-to-date basis, the naira has started 2026 at N1,428/$, reflecting sustained pressure despite occasional stability at the official market.

Analysts say the widening gap underscores the structural constraints that continue to shape the naira’s performance, including intense FX demand in the informal market and limited foreign exchange inflows.

The parallel market’s rally is the worst since mid-December 2025, when the naira fell to N1,492/$ on December 17, 2025. Between 11 and 22 December 2025, the currency sustained trading above the N1,480/$ psychological barrier, highlighting recurring stress in the informal FX market.

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While official market stability reflects the Central Bank’s ongoing reforms and interventions to manage currency flows, the parallel market continues to trade under intense pressure.

This suggests that despite brief episodes of strength at the official window, broader structural challenges continue to dominate FX dynamics in the informal sector.

The dollar remained steady at $1.1685 per euro and flat at 0.7953 Swiss franc, while the Australian dollar climbed to a 15-month high following stronger employment data and improved risk sentiment.

Analysts say sustained improvement in the naira will depend on stronger foreign exchange inflows, improved investor confidence, and reduced reliance on the parallel market.

The official market’s slight slip earlier this week—closing at N1,420.5/$ on Monday—reflected broader global dollar sentiment and renewed concerns over U.S. economic and geopolitical risks.