The naira closed the week with a divergent trend across currency markets, losing slightly in the official market while gaining strength in the black market.
Data from the Central Bank of Nigeria (CBN) showed that the naira slipped to N1,532 per dollar at the official window by Friday, weakening marginally from N1,531/$1 recorded the previous day.
Earlier in the week, the naira traded at N1,529.5/$1 on Monday, dipped to N1,530/$1 on Tuesday, and appreciated to N1,520/$1 on Wednesday before ending the week lower.
In contrast, the parallel market saw the naira strengthen, closing at N1,550/$1 on Friday, up from Thursday’s N1,555/$1. It maintained relative stability between Monday and Wednesday at around N1,560/$1, according to data from Nairametrics’ market checks in Lagos.
Compared to last week’s close of N1,528.5/$1 in the official window and N1,580/$1 in the parallel market, this week saw a marginal depreciation in the former and an appreciable gain in the latter.
Meanwhile, Nigeria’s foreign reserves experienced a slight uptick during the same period, reaching $37.3 billion by Wednesday, up from $37.28 billion on Tuesday and $37.127 billion on Monday.
Analysts believe the improvement may be linked to the declining strength of the US dollar in global markets.
Dr. Nasir Aminu, a Senior Lecturer at Cardiff Metropolitan University, explained: “The naira hasn’t been volatile in the last few months. And there is a reason behind that, which is that America’s dollar has been shrinking. It shrunk this year by about 15% which tells you what you should know about Nigeria’s currency also.”
The demand for dollars has also reportedly declined as more businesses transition to using domestic resources instead of relying heavily on imported goods.
Multiple banking sources cited an improvement in dollar liquidity across the financial system.
“There is hardly any bank branch that you go to that you will not see dollars to collect if you wanted to buy,” one insider disclosed.
Additionally, Bureau De Change (BDC) operators have begun hinting at possible industry consolidations, including mergers and acquisitions, as they work to meet new regulatory capital thresholds introduced by the CBN.
In May 2024, the apex bank raised the minimum share capital requirements for BDCs to N2 billion for Tier 1 licenses and N500 million for Tier 2 licenses, a significant jump from the previous N35 million benchmark.
