The disparity between Nigeria's official and unofficial foreign exchange rates expanded significantly last week, painting a complex picture of the nation's currency stability. While the naira recorded a modest gain in the official window, it faced intense pressure in the parallel market due to a severe shortage of US dollars.
Official Market Sees Weekly Appreciation
Data released by the Central Bank of Nigeria (CBN) indicates that the naira appreciated on a week-on-week basis at the official Nigerian Foreign Exchange Market (NFEM). The currency closed the trading week on Friday, January 9, 2026, at ₦1,423.17 per US dollar. This represented a gain of ₦7.70 compared to the previous week's closing rate.
Throughout the week, the naira traded at an average rate of ₦1,421.90 per dollar. It opened on Monday, January 5, with a slight appreciation to ₦1,429.31/$, and strengthened steadily to ₦1,418.26/$ by midweek. However, a surge in dollar demand towards the week's end caused a slight weakening, leading to the Friday close of ₦1,423.17/$. Analysts attribute the official market's resilience to inflows from foreign portfolio investors and increased supply from local participants.
Parallel Market Buckles Under Dollar Scarcity
In stark contrast, the informal parallel market told a different story. Traders reported that the naira depreciated by ₦5 over the week, closing at ₦1,480 per US dollar. This decline was driven by acute dollar scarcity in the informal segment, highlighting persistent supply constraints that are not fully reflected in the official window.
The consequence of this divergent performance is a widening gap between the two exchange rates. Financial analysis from TrustBanc Financial Group Limited shows the foreign exchange spread expanded to 3.99% from 3.09% recorded the previous week. This growing spread often signals market distortions and can encourage arbitrage activities.
External Reserves Rise Amid Global Volatility
Providing a buffer for the economy, Nigeria's gross external reserves saw an increase. According to CBN figures, the reserves grew by $100.56 million to reach $45.67 billion. This rise comes despite ongoing volatility in global commodity markets.
Oil prices, a critical factor for Nigeria's forex earnings, ended the week higher. Brent crude gained $2.59 (4.26%) week-on-week to settle at $63.34 per barrel. Similarly, U.S. West Texas Intermediate rose by $1.80 (3.14%) to $59.12 per barrel. Geopolitical tensions, including protests in Iran and the ongoing Russia-Ukraine conflict, continued to drive supply risk premiums in the oil market.
In a related development, gold prices also saw strong weekly gains as investors sought safe-haven assets. Spot gold climbed 4.16% to close at $4,510.45 per ounce.
Cautious Outlook for the Coming Week
Financial analysts, including those from AIICO Capital, expect market sentiment to remain cautious and data-driven in the short term. Investor attention is now focused on upcoming U.S. jobs data, which could influence global capital flows. Commodity prices, especially oil, are also anticipated to continue shaping broader market direction given the persistent global supply concerns.
The naira's performance last week underscores the ongoing challenges in achieving a unified and stable exchange rate. While the official market's gain offers a glimmer of optimism, the pressure in the parallel market reveals underlying dollar liquidity issues that continue to test the efficacy of Nigeria's foreign exchange management policies.
