Naira Climbs 0.59% to N1,659.26, Narrowing Exchange Rate Gap to N6

Samuel Mobolaji

The naira climbed by 0.59 per cent to N1,659.26 against the US dollar in the official market, leading to a significant contraction in the gap between official and parallel market rates to just N6.

This positive movement in the foreign exchange (FX) markets has prompted optimism among investors.

According to FX spot data from the FMDQ platform, this upward trend follows a considerable depreciation yesterday, where the local currency fell 8.5 per cent to close at N1, 669.15 per dollar.

Despite the rally, a persistent shortage of US dollars continues to pose challenges to exchange rate recovery, even though the nation’s external reserves are theoretically robust enough to weather the pressures.

Analysts have noted that a significant portion of the total balance of $38 billion in foreign reserves has already been pledged, indicating that the actual available balance is considerably lower.

In the parallel market, the naira also showed signs of recovery, mirroring the positive trend in the official currency market. The widespread appreciation of the naira has led to a marked reduction in the FX gap.

Current market checks reveal that the naira closed at N1,665 to the US dollar in the parallel market today, down from N1,684 on Wednesday. With the official rate at N1,659 and the parallel market rate at N1,665, the FX gap has now narrowed to just N6 per dollar, which has helped to curb speculative activities in the currency markets.

This is a stark contrast to the situation on Wednesday, when the official rate stood at N1,665 compared to a parallel market rate of N1,684, resulting in an FX spread of N19 per dollar.