Market News
Naira gains officially, loses ground on black market as gap hits 5.4% - THE SUN
The foreign exchange (FX) market recorded a notable divergence in August, as the naira strengthened at the official window while weakening in the parallel market, resulting in a sharp widening of the premium between the two segments.
At the Nigerian Foreign Exchange Market (NFEM), the naira appreciated by 2.58 per cent month-on-month to close August at N1,332.94/$1 compared with N1,368.22/$1 in July and N1,379.68/$ in June.
The improvement extended the naira’s appreciation over the two-month period to 3.39 per cent, reflecting stronger dollar liquidity and sustained foreign exchange inflows.
However, the gains at the official window were not mirrored in the parallel market. The dollar closed August at an average of N1,405, compared with N1,388 in July and N1,390 in June. This pushed the gap between the official and parallel-market rates to N72.06/$1 equivalent to a 5.40 per cent premium.
According to market analysts, the widening premium suggests that, despite improvements in liquidity at the official market, underlying foreign exchange demand remains elevated outside the formal window. They added that seasonal demand associated with international travel, alongside commercial and other dollar requirements, may have contributed to the renewed pressure in the parallel market. The development also highlights the uneven transmission of improved FX supply across the market. While sustained portfolio inflows and stronger non-oil foreign exchange receipts have helped support liquidity at NFEM, demand pressures in other segments appear to be keeping the parallel rate elevated. Nevertheless, conditions at the official market remained broadly supportive of the naira during the month.
NFEM liquidity was described as healthy, with single-session turnover exceeding $1.06 billion, indicating stronger trading activity and availability of foreign exchange.
Nigeria’s external position also provided additional support. Gross external reserves increased to $53.51 billion as of August 28, up 3.06 percent from $51.92 billion at the end of July and 3.98 per cent from $51.46 billion at the end of June. Reserves remained above the CBN’s $51.04 billion full-year target, providing an estimated 10.5 months of import cover.
However, softer crude oil prices remain a risk to the outlook. Brent crude declined 7.46 per cent month-on-month to $83.40 per barrel, while Bonny Light fell 6.64 percent to $88.50 per barrel. Although Bonny Light remained $13.50 above the 2026 budget benchmark of $75 per barrel, a sustained decline in oil prices could eventually weigh on export earnings and dollar supply.
Overall, the month of August presented a mixed picture for Nigeria’s FX market. Analysts at Cowry Research said that the stronger official naira, rising reserves and improved liquidity point to better conditions at NFEM, but the sharp expansion in the parallel-market premium signals that underlying FX demand pressures have not been fully resolved.
“Overall, the stronger reserve position, improved dollar liquidity and sustained FX inflows remain supportive of the naira at the official window. However, the widening parallel-market premium and softer crude prices warrant monitoring, particularly as seasonal FX demand evolves and global oil-market conditions continue to shape Nigeria’s external earnings,” they said.
