The Nigerian Naira experienced an appreciation against the U.S. dollar in the parallel market on Tuesday. The exchange rate improved to N1,725 per dollar, showing a modest gain from N1,730 recorded on Monday.
In addition to the parallel market gains, the Naira also strengthened in the Nigerian Autonomous Foreign Exchange Market (NAFEM). According to data from the Financial Market Dealers Quotation (FMDQ), the Naira’s rate in NAFEM improved to N1,630.45 per dollar, up from N1,670.65 on Monday. This increase represents a notable appreciation of N40.2 in a single day, signaling a positive movement in the official trading environment for the national currency.
One key factor behind this slight appreciation is the rise in dollar trade volume within the official market. On Tuesday, dollar turnover in NAFEM increased significantly to $242.59 million, a substantial jump of approximately 198.8 percent from the previous day’s figure of $81.17 million. This rise in volume is viewed as a strong indicator of growing confidence in the official market, which is crucial for Nigeria’s foreign exchange stability. Higher trade volume often leads to better liquidity, which can help ease pressure on the Naira.
Despite these positive indicators, the gap between the parallel market rate and the NAFEM rate has widened. The difference between the two rates increased to N94.55 per dollar on Tuesday, compared to N59.35 recorded on Monday. The widening gap continues to reflect the challenges faced by the Nigerian economy in harmonizing its exchange rates, a goal long pursued by financial policymakers.
