The Nigerian Naira continued its upward trajectory in the parallel market, appreciating to N1,610 per dollar from N1,615 per dollar recorded last Friday. This marks a consistent trend of strengthening, fueled by subdued dollar demand.
According to data released by FMDQ, the indicative exchange rate for the Nigerian Foreign Exchange Market (NFEM) climbed to N1,495.6 per dollar from N1,474.78 per dollar over the weekend, reflecting a N20.82 depreciation in the naira’s value within the official market. Despite this, the margin between the parallel market and the NFEM rate narrowed significantly to N84.4 per dollar from the previous weekend’s N141.4 per dollar gap.
This development represents a notable N45 appreciation for the naira in the parallel market compared to last Monday’s rate of N1,655 per dollar. Similarly, the official market saw the naira appreciate by N37.9, strengthening from N1,533.5 per dollar last Monday.
Currency traders, in discussions with Hobnob News, attributed the naira’s appreciation to the seasonal lull in dollar demand, particularly influenced by the Chinese New Year holidays. Additionally, the Central Bank of Nigeria’s (CBN) recent introduction of a foreign exchange code has positively impacted market sentiment, further bolstering the local currency.
An official from the Association of Bureaux De Change Operators of Nigeria (ABCON) corroborated this trend, noting that many traders with substantial dollar reserves have opted to sell, anticipating further declines in demand and exchange rates. This influx has contributed to increased dollar supply in the market.
Investigations by Hobnob News also revealed a surge in dollar liquidity from commercial banks. A senior banking official disclosed that banks have resumed honoring customer requests for Personal Travel Allowance (PTA) and Business Travel Allowance (BTA). This shift began last week, marking a significant change from previous months when such requests were frequently declined. The renewed commitment from banks to fulfill these demands has further augmented the dollar supply, contributing to the naira’s appreciation.
As the market continues to respond to these dynamics, analysts suggest that the naira’s performance will hinge on sustained low demand and proactive measures by financial institutions and regulatory bodies. The coming weeks will be crucial in determining whether this positive momentum can be maintained or if new economic pressures will emerge.
