Naira Weakens to N1,485 in Parallel Market as Divergence with Official Rate Widens
The Nigerian naira continued its depreciation in the parallel foreign exchange market on Tuesday, trading at N1,485 per dollar, widening the gap with the official Nigerian Foreign Exchange Market (NFEM) rate, which remained stable at N1,454 per dollar, according to the Central Bank of Nigeria (CBN).
The latest movement represents a N10 decline from Monday’s N1,475 per dollar in the parallel market. This divergence has intensified concerns among market participants regarding imbalances between currency demand and supply. Traders note that limited liquidity in the official FX window has amplified reliance on the parallel market, pushing rates higher.
The gap between the parallel market and official NFEM rate now stands at N31 per dollar, up from N21 per dollar the previous day. Analysts suggest that sustained differences of this magnitude can influence importers’ costs, pricing in the real estate, construction, and industrial sectors, potentially adding to inflationary pressures.
Implications for Market Stability
Economists point to rising demand pressures in the parallel market as a key factor driving the naira’s depreciation. Slow disbursement of foreign exchange in the official market, combined with elevated import demands, has created an environment where the parallel market acts as the primary channel for certain transactions, particularly for businesses facing urgent payment obligations.
“This widening spread is indicative of structural pressures in the FX market,” said a senior currency analyst in Lagos. “Unless there is an acceleration of supply into the official market, parallel market rates are likely to remain elevated, affecting key sectors of the economy.”
Central Bank Perspective
The CBN has maintained that the official NFEM remains stable, reflecting policy efforts to manage exchange rate volatility and support economic confidence. With the official rate at N1,454 per dollar, the bank continues to provide a controlled platform for critical imports and financial stability, balancing the dual objectives of currency stability and market accessibility.
The divergence highlights the ongoing challenge of harmonising Nigeria’s multiple FX markets, ensuring adequate supply, and preventing market distortions that could undermine investment confidence, inflation control, and trade competitiveness.
Outlook
Analysts recommend that bridging the gap between the parallel and official markets is essential to stabilise prices for imported goods, construction materials, and essential services. Close monitoring of FX demand, coupled with policy interventions to increase supply to the NFEM, is expected to mitigate further volatility.
While short-term fluctuations are likely to persist, sustained currency management, improved foreign inflows, and targeted interventions in the official market could stabilise the naira, restore investor confidence, and support broader macroeconomic stability in Nigeria.
Key Takeaways:
Naira trades at N1,485 per dollar in the parallel market, stable at N1,454 in NFEM.
Divergence between parallel and official rates widens to N31 per dollar.
Supply constraints in the official market are driving parallel market pressures.
Sustained policy interventions are required to stabilise the currency and prevent inflationary spillovers.
