The naira recorded mixed performance across foreign exchange markets on Tuesday, appreciating in the parallel market while weakening at the official window, as the gap between both rates narrowed significantly.
At the parallel market, the local currency strengthened to N1,396 per dollar, improving from N1,400 per dollar recorded last Thursday, indicating a modest recovery driven by improved street-level dollar supply.
However, at the official Nigerian Foreign Exchange Market, the naira depreciated to N1,389 per dollar, reflecting continued pressure within the formal segment of the market.
Data released by the Central Bank of Nigeria (CBN) showed that the indicative exchange rate weakened from N1,382.75 per dollar last Thursday, representing a depreciation of N6.25 for the currency.
Despite the divergence in performance, the spread between the parallel and official exchange rates narrowed sharply to N5 per dollar, compared to N17.25 recorded in the previous week, suggesting improved alignment across the two markets.
Market data also indicated a slowdown in trading activity at the interbank window, with the number of deals dropping to 71, an 18 per cent decline from 87 transactions recorded in the previous trading session.
Analysts say the narrowing gap between both markets reflects ongoing efforts by monetary authorities to unify exchange rates and improve liquidity, although short-term volatility remains a key feature of the system.
They further note that sustained convergence will depend on consistent foreign exchange inflows, effective policy implementation, and continued confidence among investors and market participants.
The development underscores the delicate balancing act facing regulators as they attempt to stabilise the naira while deepening reforms in Nigeria’s foreign exchange market.
