Naira Reaches 7-Month Peak, See the Amount it Strengthens to in Parallel Market
The Naira continued its upward trajectory on Monday, climbing to its highest level in seven months within the parallel market, where it improved to ₦1,500 per dollar, up from ₦1,530 per dollar last weekend.
The last instance of the Naira trading below ₦1,500 in the parallel market occurred on June 21st of last year, when it stood at ₦1,495 per dollar.
However, in the Nigerian Foreign Exchange Market (NFEM), the Naira weakened slightly to ₦1,504 per dollar from ₦1,502.5 per dollar during the same period, reflecting a marginal depreciation of ₦1.5.
This movement led to the unusual situation where the parallel market rate was lower than the official exchange rate for the first time in a long while. The gap between the two rates narrowed to ₦4 per dollar, down from ₦27.5 per dollar the previous week.
Analysts from Cardinalstone Research noted this shift, pointing out that the FMDQ FX rate fell by 0.17% to ₦1,503.63 per dollar, while the parallel market rate appreciated by 0.67%, closing at ₦1,500 per dollar.
Year-to-date (YTD), the Naira has strengthened by 9.4% in the parallel market and 2.2% in the official market, improving from ₦1,655 per dollar and ₦1,538.5 per dollar, respectively, at the end of last year.
Currency traders explained the Naira’s ongoing appreciation by citing an increase in the supply of dollars, despite sustained demand.
Yinusa Sadiq, a currency dealer, told Vanguard, “The Naira has been strengthening since last week due to better dollar availability, even though demand remains high. It’s now easier to access dollars through banks and Bureau de Change operations. Today, I bought a dollar at ₦1,490, with the dollar trading at around ₦1,510 to ₦1,500.”
Rasaq Bello, another currency trader, predicted that the Naira could continue appreciating and stabilize between ₦1,490 and ₦1,500 per dollar, given the sustained rise in dollar supply.
“If the dollar supply continues to increase, I expect the exchange rate to stabilize between ₦1,490 and ₦1,500 per dollar this week,” he said.
In their outlook for the upcoming week, analysts at CowryAsset Management Limited also forecasted a stable performance for the Naira against the dollar, barring any significant market disruptions. They noted that supply and demand dynamics will continue to influence the Naira’s value across various exchange markets.
