The Nigerian foreign exchange market opened the first week of 2026 with the British Pound Sterling (GBP) maintaining a significant gap between official and parallel market rates, reflecting continued pressure on the Naira across trading segments.
Official Market Performance
At the Nigerian Foreign Exchange Market (NFEM), the Pound began Monday, January 5, trading at an average of ₦1,936.43. This official window, largely dominated by institutional transactions and regulated by the Central Bank of Nigeria (CBN), showed the Naira hovering around this level as market players adjusted to the early-year liquidity demands.
Real-time data indicates that the rate fluctuated between a low of ₦1,927.43 and a high of ₦1,937.56 in the morning session. While intraday volatility was minor, the figures point to strong demand for the Pound for official business settlements, import payments, and other regulated transactions.
Parallel Market Update
In the parallel or black market, the Pound is trading at a marked premium. Informal traders in Lagos (Broad Street) and Abuja (Wuse Zone 4) quoted the Pound at ₦2,150 for purchases and ₦2,210–₦2,235 for sales, maintaining a wide gap of over ₦250 compared to the official NFEM rate.
The persistent spread highlights ongoing constraints in accessing foreign currency through formal channels, leaving many businesses and individuals to rely on the parallel market despite higher costs.
Factors Driving Market Dynamics
Analysts attribute the current trends in the Pound-Naira exchange to several factors:
- Post-Holiday Demand: The resumption of corporate activities after the New Year break has triggered heightened demand for foreign exchange to settle international invoices.
- Oil Revenue Speculation: Expectations and uncertainties surrounding Nigeria’s oil production targets for the first quarter of 2026 continue to shape investor sentiment toward the Naira.
- Domestic Inflation: Persistent inflationary pressures in Nigeria are eroding the Naira’s purchasing power, reinforcing its weakness against stronger global currencies such as the Pound.
Traders and investors are closely monitoring the situation for any intervention by the CBN, which could inject liquidity into the market and potentially narrow the gap between official and parallel exchange rates.
With the market entering the new year amid structural challenges in foreign currency allocation, the Pound’s premium in the parallel market underscores the ongoing volatility facing the Naira and the need for coordinated policy action to stabilise rates.