CBN Confirms New Exchange Rate as Dollar, Pound, Euro Fall Against Naira, FX Gap Narrows
- Naira has gained against the dollar in official and parallel markets as interbank FX turnover surged 226% to $80.58 million
- Street-market dollar rates fell to N1,375, narrowing the gap with the official rate to about N45
- Rising external reserves and oil prices support the naira, but traders will watch whether gains can continue
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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 strengthened against the US dollar across Nigeria’s official and parallel foreign exchange markets on Tuesday, supported by improved dollar liquidity and a sharp rise in interbank FX turnover.
The local currency also recorded gains against the British pound and euro, while the gap between the official and street-market dollar rates narrowed further.
Source: Getty Images
Naira strengthens at official FX market
Data from the Nigerian Foreign Exchange Market (NFEM) showed that the naira appreciated by 0.06% to close at N1,330.47 per dollar, compared with N1,331.33 recorded in the previous trading session.
During Tuesday’s trading, the dollar exchanged within a range of N1,327.50 to N1,331.50, reflecting relatively stable conditions in the official market.
The improvement came as dollar liquidity increased significantly.
Central Bank of Nigeria (CBN) data showed that interbank FX turnover jumped by about 226% to $80.58 million from $24.73 million recorded in the preceding session.
Higher liquidity generally gives businesses, banks and other authorised market participants greater access to foreign currency and can reduce pressure on the naira.
Dollar drops to N1,375 on parallel market
The naira also strengthened in the parallel market, where traders quoted the dollar at about N1,375.
That represented an appreciation of roughly 0.36% and reduced the difference between the official and parallel-market rates to approximately N45 per dollar, from about N49 previously.
The narrowing gap between both markets is significant because a wide disparity can encourage speculation and push individuals and businesses towards unofficial FX channels.
The latest movement means Nigerians buying dollars on the streets are still paying more than the official market rate, but the difference has continued to shrink.
Pound, euro also fall against naira
The naira's gains were not limited to the US dollar.
An FX market update from AIICO Capital showed that the official exchange rate for the British pound stood at N1,760.62, while the euro was quoted at N1,509.56.
In the parallel market, the naira strengthened against the pound to about N1,855, while the euro traded around N1,550.
The development comes amid an improvement in Nigeria’s external reserves, providing additional support for the CBN’s ability to manage volatility in the foreign exchange market.
Nigeria’s gross external reserves have risen to about $54.91 billion, compared with $45.50 billion at the beginning of the year.
Oil prices provide additional support
Developments in the global commodities market could also have implications for Nigeria’s foreign exchange position because crude oil remains a major source of dollar earnings.
Oil traded around $100.19 per barrel, while US West Texas Intermediate hovered near $95 per barrel.
Source: Getty Images
Gold, meanwhile, rose 0.38% to about $4,190.30 an ounce, recovering some of its losses after falling to a seven-week low on Monday.
For the naira, traders will be watching whether stronger FX liquidity and rising reserves can sustain the recent appreciation and further close the gap between official and parallel-market exchange rates.
British pound falls against naira
Legit.ng earlier reported that the naira has extended its gains against the British pound, pushing sterling below the ₦1,800 mark as improved foreign exchange liquidity and stronger autonomous inflows continue to support the Nigerian currency.
The pound traded around ₦1,786, a significant improvement for the naira compared with periods when sterling exchanged above ₦2,000.
Source: Legit.ng
