Nigeria’s national currency, the naira, recorded mixed performance against the US dollar on Tuesday, reflecting the continuing challenges facing Africa’s largest economy and one of the continent’s most important financial markets.
In the parallel, or unofficial, foreign exchange market, the naira depreciated to N1,420 per US dollar, compared with N1,408 per dollar recorded a day earlier. The decline indicates renewed demand for foreign currency outside the official market, where businesses and individuals often turn when access to dollars is limited.
However, the situation was different in the Nigerian Foreign Exchange Market (NFEM), where the currency posted a modest gain. Data released by the Central Bank of Nigeria (CBN) showed that the indicative exchange rate improved from N1,365 per dollar on Monday to N1,362 per dollar, representing a slight appreciation of the naira in the official market
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The differing performances widened the gap between the official and parallel exchange rates to N58 per dollar, up from N43 the previous trading day. A wider spread between both markets is closely watched by investors and businesses because it can signal persistent demand for foreign exchange and continuing market pressures.
Meanwhile, trading activity in the official market increased significantly. Interbank turnover at the Nigerian Foreign Exchange Market rose by nearly 14 percent, climbing to $156.2 million from $137.05 million recorded on Monday. The increase suggests stronger participation among banks and other financial institutions despite ongoing exchange rate fluctuations.
Nigeria has introduced a series of foreign exchange reforms over the past two years aimed at improving liquidity, attracting foreign investment, and creating a more transparent currency market. Even so, the naira continues to face pressure from strong demand for dollars, import dependence, and broader global economic conditions.
For businesses, investors, and households, movements in the exchange rate remain a key indicator of inflation, import costs, and overall economic stability. Analysts say maintaining adequate foreign exchange supply and strengthening investor confidence will be critical to narrowing the gap between the official and unofficial markets in the months ahead.
