Naira exchange rate performance shows marginal gains at official market but declines in parallel market amid rising forex demand and liquidity concerns

Naira exchange rate performance closed last week on a mixed note, with slight appreciation at the official market but losses in the parallel market driven by increased forex demand and liquidity challenges.

Also read: Nigerian Naira Depreciation Closes Week at ₦1,533.74 per Dollar

At the National Foreign Exchange Market, the naira gained 0.01 per cent to close at ₦1,533.57/\$ from ₦1,533.74/\$ the previous week.

In contrast, at the parallel market, the currency fell 0.52 per cent week-on-week, ending at an average of ₦1,545/\$1, according to the Cowry weekly report.

The depreciation in the open market was attributed to a surge in dollar demand from businesses and individuals, amplified by seasonal travel needs. Aminu Gwadabe, President of the Association of Bureau De Change Operators of Nigeria, identified liquidity as the main challenge.

“The bottom line is liquidity,” Gwadabe said. “Travellers’ demands and other drivers are putting pressure on the naira. The spread between the official market and the open market appears to be widening.”

Experts at Cowry Asset Management expect the naira to sustain marginal gains at the official window in the coming week, supported by the Central Bank of Nigeria’s (CBN) interventions.

They noted that while oil market volatility and global trade tensions could exert pressure, ongoing liquidity injections should help prevent sharp depreciation.

AIICO Capital added that the CBN’s announcement of clearing all outstanding FX forward contracts has boosted confidence in the market.

This follows the apex bank’s forensic audit of forward contracts, which uncovered significant irregularities such as mismatched company names, sales exceeding demand, and unauthorised imports.

Also read: Naira Gains Slightly at Official Window Amid FX Optimism

The CBN confirmed that all valid FX contract claims had been settled and indicated possible legal action against violators. The bank declared the issue of undelivered forward contracts concluded and closed.