The Nigerian Naira recorded a modest appreciation against the US dollar in the parallel market on Tuesday, strengthening to N1,555 per dollar from N1,560 per dollar recorded on Monday.
This slight gain marks a positive movement for the local currency amid ongoing efforts by various market players and policymakers to stabilize foreign exchange rates.
The parallel market, often considered a key indicator of currency demand and supply outside official channels, reflected growing confidence in the naira’s short-term outlook.
Similarly, the Naira experienced a marginal improvement in the Nigerian Foreign Exchange Market, where it closed at N1,536.8 per dollar, compared to N1,538.4 per dollar on Monday.
This development was corroborated by the Central Bank of Nigeria data, which confirmed the naira’s appreciation of about N2.2 within two days in the official market.
The NFEM, which is tightly regulated and often serves as a benchmark for businesses and investors, showed signs of stability as forex supply slightly improved.
The narrowing gap between the parallel market and the official forex market rates also signals a positive trend toward exchange rate convergence.
The difference, or margin, shrank to N18.2 per dollar from N21.6 per dollar earlier in the week. A reduced margin generally indicates less pressure on the naira, helping to reduce arbitrage opportunities and encouraging more forex transactions through official channels.
This can further support monetary policy goals aimed at curbing inflation and enhancing economic stability.
Experts attribute the recent gains in the naira’s value to a combination of increased forex interventions by the CBN and improved inflows from exporters and diaspora remittances.
Additionally, increased foreign investment interest in Nigerian assets and government efforts to curb speculative trading have helped to ease demand pressures on the currency.
Market watchers are hopeful that sustained policy actions will continue to support the naira’s gradual recovery against the dollar.
Despite the positive signs, analysts caution that challenges such as global economic uncertainties, fluctuating oil prices, and domestic economic pressures remain risks to the naira’s stability.
They recommend continued vigilance by monetary authorities and the private sector to foster a more robust and resilient forex market.
For now, the modest appreciation of the naira offers a hopeful glimpse of improved currency stability, which could boost investor confidence and economic growth in Nigeria.