Naira Records Mixed Fortunes: Appreciates in Parallel Market, Depreciates Officially

Naira Records Mixed Fortunes: Appreciates in Parallel Market, Depreciates Officially

The Nigerian Naira experienced a mixed performance yesterday, appreciating in the parallel market while depreciating in the official foreign exchange market. In the parallel market, the Naira strengthened to N1,660 per dollar, a slight improvement from N1,662 per dollar last weekend.

However, in the official foreign exchange market, the Naira depreciated to N1,550 per dollar, indicating a N10 depreciation from N1,540 per dollar last weekend. Data from the Daily Nigerian Foreign Exchange Market (NFEM) published by the Central Bank of Nigeria (CBN) confirmed the depreciation, while data from FMDQ showed that the indicative exchange rate depreciated to N1,545.1 per dollar from N1,533 per dollar last week Friday.

The mixed performance of the Naira has narrowed the margin between the parallel market and NFEM rate to N110 per dollar from N122 per dollar last week Friday. This development is seen as a positive sign, as it indicates a reduction in the arbitrage opportunities that exist between the official and parallel markets.

The depreciation of the Naira in the official market is attributed to the increased demand for foreign exchange, particularly from importers and investors. The CBN has been working to manage the demand for foreign exchange, while also maintaining a stable exchange rate.

The appreciation of the Naira in the parallel market, on the other hand, is seen as a reflection of the market's response to the CBN's efforts to stabilize the exchange rate. The parallel market, also known as the black market, is not regulated by the CBN and is often seen as a barometer of the market's true sentiment.

As the Naira continues to experience mixed fortunes, it remains to be seen how the CBN will respond to the developments in the foreign exchange market. The apex bank has been working to stabilize the exchange rate, while also maintaining a stable economy. The success of these efforts will depend on a variety of factors, including the global economic environment, the state of the domestic economy, and the CBN's policy decisions.