The Nigerian naira experienced divergent movements across foreign exchange markets on Thursday, according to Central Bank of Nigeria (CBN) data, weakening at the official window while strengthening in the parallel market. This split performance highlights ongoing volatility and the persistent challenge of currency stability in Africa’s largest economy.
At the official market, the naira closed at ₦1,341.35 per US dollar, depreciating by ₦3.25 from the previous day’s rate of ₦1,338.10. The decline was driven by heightened dollar demand during the trading session, a trend analysts linked to a “risk-off” sentiment among Foreign Portfolio Investors (FPIs). This investor retreat reduced foreign currency supply, tilting market dynamics and exerting downward pressure on the local currency.
Several key official rates reflected this depreciation. The NAFEX rate, a key benchmark, fell by ₦2.08 to ₦1,338.75/$. The Nigerian Foreign Exchange Market (NFEM) Volume-Weighted Average Price (VWAP) dropped by ₦3.24 to ₦1,341.35/$. The CBN’s own closing rate declined more sharply by ₦6.00 to ₦1,346.00/$. Intraday trading showed significant fluctuation, with rates ranging from a high of ₦1,350.00 to a low of ₦1,332.00.
Conversely, in the unofficial parallel or black market, the naira gained ground. The rate improved by ₦25 to trade at ₦1,340 per dollar, down from ₦1,365 the day before. This widening spread between the official and parallel markets underscores the fragmented nature of Nigeria’s foreign exchange ecosystem and the premium placed on dollars outside the regulated window.
Market observers note that the naira’s near-term trajectory will largely depend on the balance of dollar supply and demand. The CBN continues its efforts to manage liquidity and stabilise the market, but the exiting of portfolio investors and other structural factors contribute to persistent pressure. The contrasting movements between the two markets signal ongoing arbitrage opportunities and point to deeper issues of confidence and access to foreign currency.
This dual performance comes amid broader economic pressures, including inflationary trends and a foreign exchange backlog that has impacted business operations and consumer prices. The CBN’s interventions and monetary policy adjustments remain critical as the nation grapples with achieving a more convergent and stable exchange rate system. The pattern suggests that without a significant increase in sustainable dollar inflows, volatility across segments is likely to persist.
