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Naira gains at official market amid inflation rise, loses ground in parallel market

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2 hours ago

December 17, 2024

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The naira kicked off the week with a marginal appreciation against the dollar at the official foreign exchange market, offering a positive note despite inflation pressures in the economy.

According to data from the FMDQ Securities Exchange, the naira strengthened to N1,545.10/$1 on Monday, marking a gain of N4.60 from the rate of N1,549.50/$1 recorded last Friday.

The slight recovery comes as Nigeria grapples with rising inflation, which climbed to 34.60% in November 2024 from 33.88% in October, further squeezing households and businesses already burdened by high costs.

However, the naira’s performance in the parallel market painted a different picture, as the currency depreciated against major foreign currencies. The naira fell by N10 to close at N1,690/$1 on Monday compared to N1,680/$1 the previous day.

Against the British Pound, the naira weakened significantly, losing N40 to trade at N2,200/£1, up from N2,160/£1 the previous day.

Similarly, after weeks of stability, the Canadian Dollar gained ground against the naira, as the exchange rate shifted to N1,280/CA$1, reflecting a loss of N20 from the steady rate of N1,300/CA$1.

In contrast, the naira managed a notable gain against the Euro, appreciating by N45 to trade at ₦1,760/€1 on Monday, compared to ₦1,805/€1 recorded previously.

Analysts believe the mixed performance of the naira across different markets highlights the volatility in Nigeria’s foreign exchange landscape, driven by surging inflation, speculative demand, and ongoing liquidity challenges.

The Central Bank of Nigeria (CBN) has been working to stabilize the currency through monetary policy adjustments, but parallel market pressures remain persistent.

While the official market shows signs of stability, experts caution that sustained inflation and growing foreign currency demand could limit long-term gains for the naira.