The gap between Nigeria's official and parallel foreign exchange markets widened last week, as the naira held steady through official channels while slipping against the dollar in the informal market. Data from the Central Bank of Nigeria (CBN) showed the naira closed the week at N1,380.18 to the dollar in the official market, broadly unchanged from the previous week. In the parallel market, however, the currency weakened to N1,413 per dollar, down from N1,400 the week before, a depreciation of N13.
Premium Widens Between Official and Parallel Markets
The divergence pushed the premium between the two markets to N32.82, or 2.38 per cent, compared with N20.38, or 1.48 per cent, a week earlier. The widening gap points to growing demand for dollars outside the formal banking system, typically a sign that buyers are struggling to access sufficient foreign exchange through official channels. Analysts at MoneyAfrica have cautioned that reserve growth alone may not be enough to ease parallel market pressure if dollar demand continues to exceed official supply.
External Reserves Hit $51.74 Billion
Despite the pressure in the informal market, Nigeria's gross external reserves continued to rise, reaching $51.743 billion and edging closer to the $52 billion mark. The improvement has been driven by higher crude oil export earnings, increased foreign portfolio investment inflows, and CBN measures aimed at boosting liquidity in the foreign exchange market. A larger reserves buffer generally gives the CBN more room to intervene and support exchange rate stability.
CBN Targets $1 Billion Monthly Diaspora Remittances
The CBN has set a target of raising official diaspora remittance inflows to $1 billion per month by the end of 2026. The apex bank said remittances through formal channels have already tripled from about $600 million per month since it introduced sweeping foreign exchange reforms in late 2023. That increase of roughly 200 per cent has been driven by the harmonisation of exchange rates, the removal of multiple exchange rate windows, and efforts to channel funds from Nigerians abroad through regulated financial institutions.
Market Watchers Eye Closing of Premium
Market watchers will be closely monitoring whether stronger reserves and growing remittance flows can close the widening premium between the two markets. If demand in the parallel market continues to outpace what official channels can supply, analysts warn the naira could face sustained pressure despite Nigeria's improving external position. Legit.ng earlier reported on the naira's performance in the official forex market, noting its appreciation against the US dollar and a surge in interbank FX turnover. As the Central Bank of Nigeria reports a slight increase in gross external reserves, the call for Nigerians to avoid hoarding the naira emphasises a plea for responsible currency management amidst fluctuating exchange rates.
