The Nigerian naira inched closer to full exchange rate convergence on Monday, as it appreciated in the black market and held steady in the official market. This development comes amid a sharp rise in foreign exchange (FX) inflows, offering fresh support to Nigeria's monetary stability efforts.
FX Inflows Jump 75% in One Week
According to market data, total FX inflows surged by 75 percent last week, reaching $1.31 billion. Analysts attribute the boost primarily to renewed interest from foreign portfolio investors, who have shown growing confidence in Nigeria’s macroeconomic reforms and currency management strategy.
The spike in foreign inflows has helped ease pressure on the naira, leading to improved liquidity in the market and narrowing the gap between official and parallel market exchange rates.
Exchange Rate Gap Shrinks to N2/$
On Monday, traders exchanged one U.S. dollar at N1,530 in the parallel market—often referred to as the black market. In contrast, the rate at the official Nigerian Autonomous Foreign Exchange Market (NAFEM) hovered around N1,528, indicating a minimal spread of just N2 per dollar between the two segments.
This narrowing gap is one of the closest convergence points seen since the Central Bank of Nigeria (CBN) began unifying exchange rates in mid-2023.
Stability Signals Gaining Ground
The naira's improved performance reflects a growing alignment between market forces and policy direction. Analysts suggest that continued FX reforms, disciplined monetary policy, and sustained investor confidence will be critical to maintaining the trend toward convergence.
Market watchers will now look to the CBN’s next policy moves, as well as external factors such as global risk sentiment and oil earnings, to gauge the naira's prospects in the coming weeks.