Naira strengthens on parallel market, narrowing gap with official rate

The Nigerian naira recorded a notable gain on the parallel market on Friday, closing at ₦1,590 to the US dollar—up from ₦1,610 the previous day.

This marks the local currency’s strongest showing on the street market since April 8, when it traded at ₦1,565/$, signaling renewed confidence after weeks of hovering near the ₦1,600 mark.

While the parallel market showed signs of strengthening, the official Nigerian Foreign Exchange Market (NFEM) saw a slight dip. The naira closed at ₦1,554/$ on Friday, compared to ₦1,545/$ on Thursday.

Despite the mild decline at the official window, analysts see positive momentum in the forex landscape as the gap between the official and parallel market rates narrowed significantly to just ₦41—down from ₦70 the previous day. This convergence is being interpreted as a step toward a more stable and efficient currency market.

Fresh data from Cordros Securities shows that FX inflows surged significantly in May, reaching $5.96 billion — a 62 percent rise from April’s $3.67 billion.

“According to the data from FMDQ, total inflows into the Nigerian Foreign Exchange Market (NFEM) surged by 62.0 per cent m/m to $5.96 billion in May, April: $3.67 billion,” Cordros noted in its market commentary.

“The improvement was primarily due to a substantial increase in inflows from both local, 83.2 per cent of total inflows and foreign 16.8 percent of total inflows sources.
“In the near term, we anticipate that foreign exchange inflows will continue to improve, supported by growing market confidence. However, the lingering global trade uncertainties remain a downside risk to robust inflows from foreign counterparts, potentially constraining growth in overall FX liquidity,” Cordros stated.