The Nigerian Naira has made notable gains against the US Dollar in the parallel (black) market. On Thursday, the currency posted its strongest day-on-day improvement this week, marking a significant milestone in recent trading sessions. Arbiterz recently reported on how the naira strengthened from N1680 to about N1610 at the end of January 2025, suggesting a growing trend towards a stronger Naira.
Record Gains on the Black Market
According to a Bureau de Change operator based in Abuja’s Wuse Zone, the Naira appreciated to N1,570 per dollar on Thursday. This is an improvement from Wednesday’s rate of N1,590 per dollar, reflecting a gain of N20 in just one day. This N20 rise represents the largest single-day appreciation recorded in the black market for the week.
Slight Movements in the Official Market
In contrast to the gains seen in the parallel market, the official foreign exchange market experienced only a marginal change. On Thursday, the Naira traded at N1,500.65 per dollar, a slight decline from N1,499.76 per dollar on Wednesday. Although this movement is minimal, it highlights the different dynamics at play between the official and unofficial trading platforms.
Convergence Between Markets
Arbiterz has observed that the gap between the official and black market exchange rates is gradually narrowing. At the end of January, the official rate was trading at N1493 per dollar, while the black market rate was at 1610 per dollar, making a difference of N117. This difference has shrunk to N70 with the current rates in both markets as stated earlier. This trend suggests an increasing alignment between the two markets, which may point to enhanced market confidence and possibly more effective regulatory measures.
Central Bank’s Regulatory Measures
Amid these market developments, the Central Bank of Nigeria (CBN) has recently tightened its oversight of Bureau de Change (BDC) operators. Arbiterz recently described this, as one of CBN’s efforts to stabilize the Naira. To curb market volatility and maintain orderly exchange practices, the CBN’s Trade and Exchange Department has capped weekly foreign exchange sales to BDC operators at $25,000. This initiative is part of a broader strategy to ensure transparency and stability within Nigeria’s foreign exchange ecosystem.
The Naira’s significant appreciation in the black market coupled with the narrowing difference between official and unofficial rates underscores a period of dynamic change in Nigeria’s currency markets. With the Central Bank’s enhanced oversight, stakeholders are keenly watching to see how these measures will further influence market behavior and contribute to overall financial stability.
