June 24, 2024

Naira Strengthens to N1,475/$ in Parallel Market, Slightly Weakens in NAFEM

 

By: Emmanuel Ibitoye

 

The Nigerian Naira showed a modest improvement in the parallel market, appreciating to N1,475 per dollar on Tuesday from N1,480 per dollar the previous day. This positive movement offers a slight reprieve amidst the ongoing economic volatility.

 

Conversely, in the Nigerian Autonomous Foreign Exchange Market (NAFEM), the Naira experienced a minor depreciation, slipping to N1,476.95 per dollar from N1,476.12 per dollar on Monday. This represents an 83 kobo decline, according to data from FMDQ.

 

The increased trading volume on the NAFEM window was notable, with dollar turnover soaring by 94.5 percent to $236.99 million, compared to $121.87 million on Monday. This surge in activity has contributed to narrowing the margin between the parallel market and NAFEM rates to N1.95 per dollar from N3.88 per dollar previously.

 

Financial analysts suggest that the improved liquidity in the market might be a contributing factor to the Naira’s appreciation in the parallel market. However, the slight depreciation in NAFEM indicates ongoing pressures in the formal exchange market.

 

Despite these mixed signals, the narrowing gap between the two exchange rates is seen as a positive development, potentially indicating a move towards stabilization. The increased trading volume highlights a more active market, which may help to align the parallel and official exchange rates more closely in the near future.

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