Naira Shows Divergent Performance in Official and Unofficial FX Markets
The Nigerian Naira exhibited contrasting movements across different segments of the foreign exchange market this week, gaining ground in official channels while experiencing depreciation in the parallel market. This divergence highlights the ongoing complexities in Nigeria's currency management landscape.
Black Market Sees Naira Depreciation to N1490/$
Traders operating in the unofficial foreign exchange market, commonly referred to as the black market, reported that the Naira exchanged at N1490 per United States Dollar on Tuesday, January 27. This represents a slight weakening from previous trading sessions, indicating continued volatility in the parallel market.
Multiple currency dealers confirmed the new selling rates to business journalists, noting that the dollar was previously trading at slightly more favorable rates for the Naira. One trader, identified as Abdullahi, provided specific transaction details:
- US Dollar: Sold at N1,470 and bought at N1,487
- Pound Sterling: Traded between N1,985 and N2,025
- Euro: Exchanged at N1,720 to N1,755
The trader commented on the current market uncertainty, stating, "The market is unstable right now because we are unsure of the market direction." This sentiment reflects the cautious atmosphere prevailing in unofficial trading circles.
Official Markets Record Naira Appreciation
In stark contrast to the black market performance, the Naira demonstrated strength across multiple official foreign exchange platforms. On the Nigerian Foreign Exchange Market (NAFEM) window, the currency gained N2.68 or 0.19% against the dollar, closing at N1,418.95/$1 compared to the previous Friday's rate of N1,421.63/$1.
The local currency also strengthened against other major global currencies in the official market:
- Gained N3.05 against the Pound Sterling to settle at N1,921.12/£1
- Appreciated N3.60 against the Euro to close at N1,682.31/€1
At GTBank's forex desk, the Naira remained stable at N1,430/$1 at the close of trading on Monday, January 26, demonstrating consistency in the banking sector's exchange rates.
Central Bank Releases Updated Official Exchange Rates
The Central Bank of Nigeria has published current official exchange rates for various currencies, providing transparency in the formal market. The rates (in Naira per unit) include:
- US Dollar: N1418.95
- Pounds Sterling: N1921.12
- Euro: N1682.31
- Yuan/Renminbi: N204.03
- Swiss Franc: N1824.32
- South African Rand: N88.33
- Yen: N9.21
- Riyal: N378.39
- CFA: N2.54
External Reserves Reach Eight-Year High
Supporting the Naira's official market performance, Nigeria's external reserves have continued their upward trajectory, reaching an impressive $46.01 billion as of January 22, 2025. This represents the highest level in eight years, with the last comparable figure recorded on August 24, 2018, when reserves stood at $46.09 billion.
Financial analysts anticipate the Naira will maintain its positive momentum in the official market due to several supportive factors:
- Improved efficiency in foreign exchange market operations
- Increased capital inflows from international investors
- Sustained diaspora remittances supporting currency stability
- Broad-based economic recovery enhancing market confidence
- Current account surplus contributing to reserve accumulation
Customs Exchange Rate Adjustment
In related developments, the Central Bank of Nigeria has adjusted the customs exchange rate used for clearing imported goods at the nation's ports and airports. The new rate reflects the Naira's recent performance in the official foreign exchange market, showing a modest increase that aligns with the currency's strengthening trend.
Customs authorities now adopt the closing foreign exchange rate on the date of opening Form M for importation as the benchmark rate for import duty assessment. This policy adjustment ensures alignment between trade documentation and actual market conditions.
The divergent performance between official and unofficial markets continues to present challenges for currency management, with authorities working to narrow the gap through policy measures and market interventions. Market observers will closely monitor whether the Naira's official market gains can translate into broader stability across all trading segments.
