Nigerians Rush to Sell Dollars as Naira Hits Three-Year High in Parallel Market
The Nigerian currency has experienced a sharp strengthening in the parallel market, prompting a rush among speculators to sell off their dollar holdings. This movement has significantly narrowed the gap between the official and black market exchange rates, with the naira reaching a three-year high of N1,345 per dollar in the parallel segment.
Naira Appreciation and Market Convergence
Data from street traders indicates that the naira strengthened by N25, or 1.86%, from N1,370 per dollar on Wednesday to as high as N1,345 on Thursday in the parallel market. The last time the black market traded near this level was in October 2023, according to market reports. In contrast, at the Nigerian Foreign Exchange Market window, the currency weakened slightly, with the dollar quoted at N1,341.35, reflecting a depreciation of N3.24 or 0.24 percent from the previous day's rate of N1,338.11.
The latest movement has narrowed the spread between both segments to about N4, a sharp improvement from the N92 gap recorded last week. The market last witnessed full convergence on July 4, 2024, when the naira traded at N1,520 per dollar in both segments. This appreciation marks one of the strongest convergence levels recorded in two years, highlighting a positive trend in Nigeria's forex market.
Factors Driving the Dollar Sell-Off
Market participants attribute the sharp appreciation in the parallel market to increased dollar supply from speculators who began offloading their holdings after the Central Bank of Nigeria reopened access to the official FX window for Bureau De Change operators. Nigeria's external reserves continued their steady climb, rising to $48.50 billion as of February 17, 2026, according to data from the central bank, strengthening its capacity to support the currency.
Reacting to the development, Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria, stated that the naira's supremacy is excellent as the gap between the NFEM market and parallel market closes down. He noted that the decision by the CBN to allow BDCs to buy dollars from banks will increase dollar liquidity at the critical retail end of the market and provide a source of dollars to the operators.
Taiwo Ebenezer, South-West chairman of ABCON, added that the naira's appreciation followed the announcement that BDCs would resume participation at the NFEM window as directed by the central bank. However, despite the renewed optimism, BDC operators have yet to commence dollar purchases from commercial banks one week after the reopening of the market.
CBN Guidelines for BDC Operations
In a circular signed by Musa Narkoji, director of the Trade and Exchange Department, the apex bank authorised licensed BDCs to purchase foreign exchange from the NFEM through authorised dealer banks at prevailing market rates. Under the guidelines, authorised dealer banks must complete all Know-Your-Customer and due diligence checks for BDC clients. Upon satisfactory documentation, banks may sell foreign exchange in line with extant guidelines, subject to a maximum of $150,000 per week per BDC.
This regulatory move is expected to further stabilize the forex market and support the naira's ongoing recovery, as Nigeria continues to navigate economic challenges and foster a more unified exchange rate environment.
