Black Market Dealers Quote New Rates For the Dollar as Naira Appreciates in Official Window
- The naira appreciated by 2.58% in the official market, but weakened in the parallel market
- The development widened the gap between official and parallel market rates, reflecting ongoing demand pressures
- Nigeria's external reserves strengthened, yet falling oil prices pose risks to naira's stability
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Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
The naira recorded a mixed performance across Nigeria’s foreign exchange market in August, strengthening significantly at the official window while losing ground in the parallel market.
At the Nigerian Foreign Exchange Market (NFEM), the naira appreciated by 2.58 per cent month-on-month to close August at N1,332.94 per dollar, compared with N1,368.22 in July and N1,379.68 in June.
Source: Getty Images
The latest gain means the currency has strengthened by 3.39 per cent over the past two months, supported by improved dollar liquidity and sustained foreign exchange inflows.
The development points to increasingly favourable conditions at the official market, where stronger supply has helped ease pressure on the naira.
Parallel market tells a different story
Despite the official-market gains, the parallel market moved in the opposite direction.
The dollar closed August at an average of N1,405, up from N1,388 in July and N1,390 in June.
As a result, the difference between the official and parallel-market rates widened dramatically to N72.06 per dollar, representing a 5.40 per cent premium.
The increase marks a sharp reversal from July, when the spread was just N19.78, equivalent to 1.45 per cent. In June, the differential stood at only N10.32, or 0.75 per cent, according to a report by Daily Sun.
The widening gap suggests that stronger liquidity at the official market has yet to fully translate into reduced demand pressures in the parallel market.
Seasonal demand puts pressure on dollar rates
Market analysts attributed some of the renewed pressure to seasonal demand, including foreign travel and commercial dollar requirements.
They noted that while portfolio inflows and stronger non-oil foreign exchange receipts have improved liquidity at NFEM, demand in other segments of the market continues to support higher parallel-market rates.
NFEM liquidity remained relatively healthy during the month, with single-session turnover exceeding $1.06 billion, signalling stronger trading activity and improved availability of foreign exchange.
Reserves provide support for naira
Nigeria’s external reserves also strengthened during August, providing additional support for the currency.
Gross external reserves rose to $53.51 billion as of August 28, from $51.92 billion at the end of July and $51.46 billion in June.
The latest reserve position was 3.06 per cent higher than July and 3.98 per cent above June. It also remained above the Central Bank of Nigeria’s $51.04 billion full-year target, providing an estimated 10.5 months of import cover.
Falling oil prices remain a risk
However, softer crude oil prices could pose a challenge to the naira outlook if the decline persists.
Brent crude fell 7.46 per cent month-on-month to $83.40 per barrel, while Bonny Light declined 6.64 per cent to $88.50.
Although Bonny Light remained above Nigeria’s 2026 budget benchmark of $75 per barrel, a prolonged fall in crude prices could weaken export earnings and reduce dollar inflows.
Source: Getty Images
Cowry Research said stronger reserves, improved dollar liquidity and sustained FX inflows remain supportive of the naira at the official window. However, it warned that the widening parallel-market premium and softer oil prices require close monitoring.
The August figures therefore present a mixed picture: the official naira is gaining strength, but persistent dollar demand continues to keep the parallel-market rate elevated.
Naira records biggest gain in 2 years
Legit.ng previously reported that the recent appreciation of the naira has reached its strongest level against the US dollar in over two years, as reported by the Central Bank of Nigeria.
This recovery reflects broader trends in Nigeria's foreign exchange market and is accompanied by a significant increase in the nation’s external reserves.
Amidst global economic fluctuations, the naira's resurgence not only points to a positive shift in Nigeria's currency strategy but also signifies the potential for stability in the nation's financial landscape.
Source: Legit.ng
