The Nigerian naira experienced a divergence in its performance against the United States dollar on Thursday, appreciating at the parallel foreign exchange (FX) market while recording a slight depreciation at the official window. This mixed sentiment in the FX markets coincides with the recent announcement of a decrease in Nigeria's inflation rate for April 2025.
Parallel Market Appreciation
In a notable shift, the naira recorded its first appreciation against the dollar this week at the parallel market. According to Abubakar Alhasan, a Bureau de Change (BDC) operator in Wuse Zone 4, Abuja, the naira strengthened to N1625 per dollar on Thursday. This represents a N10 gain compared to the N1635 per dollar it exchanged for on Wednesday. Mr. Alhasan further disclosed the buying and selling rates at his bureau as N1620 and N1625, respectively.
Slight Depreciation at Official Market
Contrasting the positive movement at the parallel market, the naira experienced a marginal depreciation at the official FX window. Data indicates that the currency weakened slightly by N2.63 to trade at N1,599.33 per dollar on Thursday. This follows a period of relative stability for the naira against the dollar in the official market.
Market Dynamics Amidst Easing Inflation
These mixed performances in both segments of the foreign exchange market occur at a significant economic juncture for Nigeria. The National Bureau of Statistics recently reported that Nigeria's inflation rate for April 2025 dropped to 23.7 percent. This decrease in the inflation rate could potentially influence sentiments and trading activities within the foreign exchange markets, although its immediate impact appears to be nuanced, leading to the observed divergence in naira's performance across different market segments.
The appreciation at the parallel market might suggest increased dollar supply or a shift in demand dynamics within that segment. Conversely, the slight depreciation at the official window could be influenced by various factors including demand pressures from importers or adjustments in market supply mechanisms. The interplay of these forces, against the backdrop of easing inflation, will likely continue to shape the trajectory of the naira in the near term.