The naira traded slightly weaker on Tuesday across Nigeria’s foreign exchange markets, with official rates hovering in the mid-₦1,400 range, while black-market dealers continued to quote the U.S. dollar at about ₦1,490 to ₦1,505.
Market Overview
According to market data and FX trackers, the official rate on the Nigerian Foreign Exchange Market (NFEM), linked to the Central Bank of Nigeria (CBN), averaged around ₦1,461.36 per dollar on October 14, showing only minimal daily movement.
In contrast, the parallel market — where most retail dollar transactions take place — remained higher. Reports from traders and independent monitoring platforms indicated selling prices between ₦1,490 and ₦1,505 per dollar, depending on location and seller.
This persistent difference between the official and black-market exchange rates reflects ongoing pressure from strong retail demand for dollars and limited liquidity at the street level.
Why the Gap Persists
Analysts attribute the sustained spread between both markets to several factors:
Restricted FX inflows: Weaker foreign exchange inflows, especially from oil exports, reduce the supply of dollars.
High retail demand: Importers, travellers, and remittance users continue to drive up dollar demand in the informal market.
Liquidity delays: There is often a lag between central bank interventions and the actual distribution of dollars to bureau de change operators and individuals.
While the CBN’s official rate continues to serve as a benchmark for banks and corporate transactions, parallel market rates more accurately reflect real-time conditions in the retail market.
Key Market Drivers
Oil Receipts and Sovereign Inflows: Stronger oil-related dollar inflows typically help ease pressure on the naira, while weaker inflows can cause the exchange rate premium to widen.
Market Liquidity: The amount of dollar liquidity in the NFEM and activity among bureau de change operators will shape short-term market trends.
Impact on Nigerians
For individuals and businesses reliant on cash dollars — such as importers, travellers, and those receiving remittances — the higher rates on the parallel market translate into more expensive conversions. Companies with access to official channels, however, can transact closer to the NFEM benchmark rate.
Those planning international payments or foreign purchases are advised to verify both official bank rates and parallel market quotes before completing transactions.
