Naira appreciates in parallel, official markets

The naira, on Wednesday, appreciated to N1,240 per dollar at the parallel section of the foreign exchange (FX) market.

The current FX rate signifies an increase of 0.80 percent from the N1,250/$ reported on April 1.

Currency traders, also known as street traders, in Lagos, quoted the buying rate of the local currency at N1,220 and the selling rate at N1,240.

At the official window, the local currency appreciated by 1.25 percent against the dollar from N1,278.58 on April 2 to close at N1,262.85 on Wednesday, according to FMDQ Exchange, a platform that oversees the Nigerian Autonomous Foreign Exchange Market (NAFEM).

During trading hours in the official window, a dollar was sold as high as N1,296 and at a low rate of N1,210.

The daily foreign exchange market turnover was $166.18 million.

With the current figures at both FX markets, the official market rate surpasses the parallel market rate by N22.85.

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Meanwhile, on March 10, Goldman Sachs said the naira will appreciate to N1,200 against the dollar in the next twelve months.

“We thus see reason for the Naira to be undervalued, and we see it appreciating to 1200 within the next 12 months,” Goldman Sachs said.

Goldman Sachs said Nigeria is “turning the corner” following its recent currency crisis.

Starting in mid-March, the Nigerian naira has appreciated against the U.S. dollar, reducing the foreign exchange (FX) rate used for assessing customs import duties. This rate decreased from a high of N1,612.28 on March 16 to its present value, marking a fall of N281.92 or 17.46% in just two weeks.

Throughout March, the naira experienced a significant appreciation, gaining approximately 21.8%—the most substantial increase in five years.

The recent rise in the naira’s value is largely due to the reforms by the central bank, including a notable interest rate increase of 600 basis points over two months. As a result, the Monetary Policy Rate (MPR) surged from 18.75% at the start of the year to 24.75% by March’s end.