Naira Strengthens Against Major Currencies as Interbank FX Turnover Surges

The Nigerian naira has strengthened against major currencies in both official and parallel foreign exchange markets. According to data from the Nigerian Foreign Exchange Market (NFEM), the local currency appreciated by 0.06% to close at N1,330.47 per dollar on Tuesday.

This comes as interbank FX turnover surged 226% to $80.58 million, a significant increase in dollar liquidity that has given businesses and banks greater access to foreign currency and reduced pressure on the naira.

The gap between official and parallel-market exchange rates narrowed further, with the naira quoted at about N1,375 per dollar in the parallel market, down from around N1,400 previously. This narrowing of the gap is significant as a wide disparity can encourage speculation and push individuals and businesses towards unofficial FX channels.

The naira also recorded gains against the British pound and euro, with the official exchange rate for the pound standing at N1,760.62 and the euro quoted at N1,509.56. In the parallel market, the naira strengthened against the pound to about N1,855 and traded around N1,550 against the euro.

The strengthening of the naira is partly due to an improvement in Nigeria's external reserves, which have risen to around $54.91 billion from $45.50 billion at the beginning of the year. Rising oil prices also provide additional support for the CBN's ability to manage volatility in the foreign exchange market.