The naira strengthened to ₦1,394 per dollar at Nigeria’s official foreign exchange window on Wednesday—its strongest level since May 2024—even as the gap between the official and parallel markets widened sharply, underlining persistent structural distortions in the FX system.
Data published by the Central Bank of Nigeria shows the currency appreciating at the Nigerian Foreign Exchange Market (NFEM) from ₦1,409.5/$ on Tuesday to ₦1,394/$, extending a short-term rally that has followed weeks of volatility.
Official Rate Strength Masks Renewed Market Divergence
While the official-market performance has revived cautious optimism among traders, the parallel market has moved in the opposite direction, keeping pressure on price convergence.
On Wednesday, the naira traded around ₦1,490/$ in the parallel market, slightly firmer than Tuesday’s ₦1,491/$, but still far removed from the official rate. This pushed the official–parallel spread to ₦96, the widest differential since February 5, 2025, when the gap peaked at ₦105.
The re-emergence of a wide spread suggests that FX demand outside official channels remains largely unmet, despite recent improvements in liquidity and price discovery at the NFEM.
What the Numbers Show
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Official (NFEM) close: ₦1,394/$
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Previous close: ₦1,409.5/$
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Best official level since: May 29, 2024 (₦1,329.65/$)
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Parallel market rate: ~₦1,490/$
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Official–parallel gap: ₦96
Market analysts note that the naira’s appreciation reflects temporary easing of pressure at the official window, rather than a broad-based resolution of FX imbalances.
Why the Gap Is Widening Again
The renewed divergence highlights lingering confidence issues across Nigeria’s FX ecosystem:
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Demand pressures remain elevated in the informal market, particularly for travel, school fees, and offshore obligations.
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Speculative positioning continues to influence parallel-market pricing, even as official-market reforms improve transparency.
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Liquidity access at official windows has improved, but not enough to fully absorb economy-wide FX demand.
As a result, gains at the NFEM are not yet translating into uniform pricing across the market.
Global Dollar Weakness Adds External Support
The naira’s official-market rally has coincided with a period of global US dollar weakness, as investors reassess the outlook for the American economy and the impact of US trade policies on growth.
The dollar has retreated to its weakest levels since early 2022, providing near-term relief for emerging and frontier market currencies, including Nigeria’s. US President Donald Trump downplayed concerns over the dollar’s decline this week, saying he viewed the currency’s performance positively.
Nigeria’s FX reforms have improved official-market stability, but the widening spread is a reminder that confidence, depth, and access remain uneven. Until FX demand is more comprehensively met across the economy, price convergence between official and parallel markets will remain fragile, regardless of short-term gains at the NFEM.
For policymakers and investors alike, the message is clear: a stronger official rate is progress—but closing the gap is the real test of reform credibility.
