LAGOS, NIGERIA — The naira appreciated to N1,373 per dollar in the parallel market on Friday. This is an improvement from N1,380 recorded on Thursday.
However, the naira remained stable at N1,346 per dollar in the Nigerian Foreign Exchange Market. This is according to data from the Central Bank of Nigeria.
Narrowing Margin
Consequently, the margin between the parallel and official markets narrowed to N27 per dollar. This is a reduction from the N36 margin recorded on Thursday.
The value of interbank turnover in the NFEM also increased. It rose by 8.9 per cent to $58.9 billion from $54.05 billion on Thursday.
Analysts’ Outlook
Analysts expect the mixed performance of the naira to continue in the coming weeks.
In their financial market review and outlook, analysts at Cowry Asset Management Limited shared their projection. They said the naira would remain relatively mixed across the foreign exchange markets in the near term.
The analysts noted that this projection is supported by marginal improvements in external reserves and potential foreign exchange inflows.
“However, sustained pressure on foreign currency demand could limit further gains,” they added.
What This Means
The appreciation of the naira in the parallel market is a positive development. It reflects improved liquidity in the foreign exchange market.
The narrowing gap between the official and parallel market rates is also significant. It indicates that the CBN’s reforms are having an impact.
However, analysts caution that the gains may be limited. Sustained demand for foreign currency could put pressure on the naira.
What Happens Next
The CBN will continue to monitor the market. It has pledged to maintain stability in the foreign exchange market.
For now, the focus is on sustaining the gains. The coming weeks will reveal whether the naira can maintain its current value.
