Naira Depreciates to N1,340/$ as Parallel Market Hits N1,400/$ Amid Dollar Strength

The Nigerian naira recorded a marginal depreciation on Wednesday, trading at N1,340/$ at the official market, down from N1,337/$ the previous day. According to the Central Bank of Nigeria (CBN), intraday activity saw the naira fluctuate between N1,328/$ and N1,340/$, with a simple average of N1,337.17/$. The movement reflects modest volatility amid ongoing efforts to stabilize the currency.

Meanwhile, the naira’s weakness was more pronounced in the parallel market, where it fell to N1,400/$ from N1,382.5/$. This widened the gap between official and black market rates to about N60, highlighting persistent segmentation in Nigeria’s foreign exchange market despite ongoing reform initiatives by the CBN.

The pressure on the naira coincided with gains in the U.S. dollar following the release of minutes from the Federal Reserve’s latest policy meeting. The minutes indicated that some policymakers are open to further tightening of interest rates if inflation remains high, strengthening the dollar against major currencies, including the euro and the Japanese yen.

The Central Bank of Nigeria has continued implementing reforms aimed at improving liquidity, transparency, and rate unification across FX windows. These measures, along with improved foreign inflows, have contributed to relative stability compared to the sharp swings experienced during earlier reform phases. CBN Governor Olayemi Cardoso emphasized Nigeria’s role in advancing Africa’s single currency agenda.

Despite these efforts, analysts note that the N60 gap between official and parallel market rates underscores ongoing challenges. Investors and businesses closely monitor these fluctuations, as persistent disparities could affect import costs, inflation, and broader economic activity if the naira continues to face external pressures from a strong dollar.

source: nairametrics