Naira Strengthens Officially, Dollar Rises in Parallel Market

In August, Nigeria's Naira appreciated by 2.58% in the official foreign exchange market, closing at N1,332.94 per dollar, compared to N1,368.22 in July. This improvement was attributed to enhanced dollar liquidity and foreign exchange inflows, resulting in a 3.39% strengthening over two months.

Despite these gains, the parallel market saw the dollar rise to an average of N1,405, up from N1,388 in July, which widened the gap between the official and parallel market rates to N72.06 per dollar, a 5.40% premium. Analysts noted that seasonal demand, including for foreign travel, contributed to the pressure in the parallel market.

The Nigerian Foreign Exchange Market (NFEM) recorded a healthy liquidity level, with single-session turnover exceeding $1.06 billion. Nigeria's external reserves rose to $53.51 billion as of August 28, up from $51.92 billion at the end of July.

However, declining crude oil prices could challenge the Naira's outlook if the trend continues.