The Nigerian Naira gained strength in the parallel market, reaching N1,610 per dollar yesterday, up from N1,615 per dollar recorded last Friday. This rise comes amid continued weak demand for the dollar. However, in the official market, the Naira saw a slight depreciation, falling to N1,495.6 per dollar.
Data from FMDQ revealed that the indicative exchange rate for the Nigerian Foreign Exchange Market (NFEM) increased from N1,474.78 per dollar last weekend to N1,495.6 per dollar, marking a depreciation of N20.82 for the Naira. As a result, the gap between the parallel market rate and the NFEM rate has narrowed significantly, from N141.4 per dollar to N84.4 per dollar.
In comparison to last week’s Monday rates, the Naira appreciated by N45 in the parallel market from N1,655 per dollar, and by N37.9 in the official market from N1,533.5 per dollar.
Currency traders explained that the weak dollar demand, which is largely driving the Naira’s appreciation, is linked to the ongoing Chinese New Year holiday and the Central Bank of Nigeria’s (CBN) introduction of the foreign exchange code.
A senior official from the Association of Bureaux De Change Operators of Nigeria (ABCON) mentioned that the decrease in demand has encouraged some currency traders, who were holding significant dollar reserves, to sell off their dollars in anticipation of lower demand and a possible drop in exchange rates. This helped to increase the supply of dollars in the market.
