As markets deal with currency pressures, the naira depreciates against the U.S. dollar but remains strong against the British pound.
As the trading week came to an end and a new one began, the Nigerian Naira had mixed results in the currency markets. It lost value against the U.S. dollar while gaining some strength against the British pound sterling.
In the parallel/black market, the naira fell to N1,495 per dollar on Friday from N1,490 per dollar on Thursday, indicating ongoing pressure on the local currency in the unofficial sector.
The Nigerian Foreign Exchange Market (NFEM) saw a decline in the value of the naira, which ended the day at N1,421.9 to the dollar. The indicative exchange rate increased to N1,421.9 per dollar from N1,421.5 per dollar on Thursday, indicating a 4 kobo depreciation, according to data from the Central Bank of Nigeria (CBN).
Consequently, the difference between the official and parallel markets increased to N73.1 per dollar from N68.5 on Thursday. The naira closed at the same level as it opened, N1,495 per dollar, in the parallel market, but it lost N1.40 against the dollar over the course of the week on the official market, BrandSpur banking and finance news desk reports.
Today, however, the British Pound Sterling began the new trading week with a minor cooling off against the Naira. Supported by stable liquidity in the official market, the local currency has demonstrated resilience in the early morning session after a period of modest gains for the pound. The average price of the pound right now in the NFEM is N1,924.04. Given that the market began the session with the Pound at N1,941.36, this indicates a slight increase for the Naira.
The rate fell as low as N1,922.86 during intraday trading before levelling off at the present N1,924 level. This movement, according to analysts, reflects the Naira’s overall stabilisation against major world currencies, which is fueled by the CBN’s steady policy framework aimed at reducing volatility. As the month comes to an end, the current trend suggests that the Pound is having difficulty breaking above the N1,950 resistance level in the official window.
Although the spread is mostly unchanged from previous weeks, the Pound is still trading at a premium on the unofficial or parallel market. Bureau De Change (BDC) operators exchange the pound at rates ranging from N2,010 to N2,035 in major commercial centres such as Lagos and Abuja. Small-scale cross-border trade and individual travel needs continue to be the main drivers of demand in the parallel market. Lagos traders report that although demand is stable, there is no sign of the speculative hoarding or panic buying that marked the market in prior years.
According to reports, there is enough Pound available in the unorganised sector to meet present retail demands. The complex dynamics that Nigeria’s foreign exchange markets face as the CBN continues to manage currency stability across multiple exchange rate windows are highlighted by the Naira’s divergent performance against the dollar and the pound.
