Nigeria’s currency gained modest ground at the official foreign-exchange window on Monday, even as the parallel market held steady near ₦1,500 to the U.S. dollar, maintaining a wide premium over the Central Bank of Nigeria’s (CBN) benchmark rate.
Data from the Nigerian Foreign Exchange Market (NFEM) — the volume-weighted average rate used by the CBN as its daily official reference — showed the naira opening around ₦1,462.50 per dollar on October 13. The NFEM rate serves as a key benchmark for corporates, importers, and analysts in cross-border pricing and financial reporting.
By contrast, quotes from the parallel, or informal, market tracked by platforms such as NairaToday and AbokiFX remained steady at about ₦1,500 per dollar for cash sales in Lagos, Abuja, and other major cities. The persistence of this premium highlights ongoing liquidity constraints and robust retail demand for foreign currency, particularly among small traders and remittance recipients.
Market analysts attribute the spread between official and parallel rates to several factors — including moderate dollar supply at official windows, continued cash dollar demand, and the lag between recent monetary policy adjustments and market-level liquidity. The CBN’s decision in late September to lower its benchmark interest rate by 50 basis points has improved sentiment but has yet to fully close the pricing gap.
Implications for businesses and consumers
For corporates and importers transacting through formal channels such as the NFEM or FMDQ, the stronger official rate offers some relief, potentially reducing the cost of dollar-denominated inputs and improving margins. However, retail consumers, small-scale traders, and travelers relying on physical cash continue to face higher conversion costs at parallel rates — affecting remittances, overseas tuition payments, and travel budgets.
Remittance flows remain split between the two markets: formal bank transfers generally reflect NFEM rates, while informal cash conversions continue to be priced closer to the parallel market benchmark.
Analysts expect the dual-rate dynamic to persist in the near term. “The gap will remain until dollar inflows into the official market improve significantly,” said one Lagos-based FX strategist. “That could come from stronger export receipts, sustained portfolio inflows, or more active central bank liquidity interventions.”
For now, the naira’s modest gain at the official window offers a temporary reprieve, but the underlying imbalance between official and street-level FX markets remains a key challenge for Nigeria’s monetary authorities.