Market Naira Drops to N1,510 Per Dollar in the Parallel Market
The Naira weakened further in the parallel market, depreciating to N1,510 per dollar on Monday from N1,505/$ recorded over the weekend.
However, in the Nigerian Foreign Exchange Market (NFEM), the currency saw a slight improvement, appreciating to N1,499/$ from N1,500/$ last Friday, according to data from the Central Bank of Nigeria (CBN). This reflects a modest N1 gain for the naira in the official market.
As a result, the gap between the official and parallel market rates expanded to N11 per dollar, up from N5 per dollar recorded last weekend.
Market Trends and Economic Impact
The widening exchange rate disparity highlights persistent pressure in the forex market, with demand for dollars outpacing supply, particularly in the informal sector. Despite the CBN’s interventions to stabilize the naira, fluctuations in both markets indicate continued volatility.
Analysts attribute the depreciation in the parallel market to increased demand for dollars for imports, travel, and business transactions, alongside lingering supply constraints in the official window. Meanwhile, the slight appreciation in the NFEM suggests ongoing efforts by the CBN to enhance liquidity and curb speculative trading.
With the exchange rate gap growing, concerns about potential arbitrage opportunities and market distortions are increasing. Experts emphasize that to achieve long-term stability, Nigeria needs sustained dollar inflows from exports, foreign investments, and remittances.
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