GistReel
The naira opened Wednesday at about N1,350 per US dollar in the official market, maintaining its recent gains despite a significantly higher parallel-market rate.
The latest official figures indicate that the local currency strengthened to N1,350/$ on Monday, August 17, from N1,358.25/$ recorded three days earlier.
The development suggests relative stability in the formal foreign exchange market, where the naira has remained within a narrow range in recent sessions.
Dollar remains more expensive outside official market
Away from the official market, the dollar continued to command a premium.
Available market data showed that dealers in the parallel market were buying the dollar at approximately N1,405 and selling it for N1,415 on Tuesday.
Consequently, a person looking to obtain $1,000 at the prevailing selling price would require about N1.415 million.
Conversely, someone selling $1,000 could receive roughly N1.405 million based on the prevailing buying rate.
The difference between both markets stood at about N65 per dollar, with the parallel-market selling rate significantly above the official NFEM rate.
An indicative USD/NGN rate available on Wednesday also placed the dollar at around N1,350.24. However, such live rates are separate from the official NFEM fixing and may change throughout the day.
Factors to shape naira’s outlook
The recent performance of the naira has come amid relatively stronger foreign exchange liquidity and dollar supply.
Attention is now turning to factors that could determine whether the currency sustains its current position.
These include crude oil earnings, foreign investment, remittances, demand for dollars by importers, overall foreign exchange inflows and future decisions by the Central Bank of Nigeria.
The NFEM rate is calculated from transactions carried out within the formal foreign exchange market using a volume-weighted average.
Meanwhile, rates in the parallel market are not fixed and can differ according to the dealer, location and size of a transaction.
The CBN does not recognise the parallel market as an official foreign exchange platform. It therefore advises individuals and businesses to obtain foreign currency through authorised channels.