The Naira strengthened to N1,610 per dollar in the parallel market yesterday, up from N1,615 per dollar last Friday, as weak demand for the dollar continues.
However, the Naira weakened in the official market, falling to N1,495.6 per dollar from N1,474.78 per dollar last weekend, reflecting a N20.82 depreciation.
Data from FMDQ showed that the indicative exchange rate for the Nigerian Foreign Exchange Market (NFEM) increased to N1,495.6 per dollar, reducing the gap between the parallel and official markets to N84.4 per dollar, down from N141.4 per dollar last weekend.
The parallel market saw a N45 appreciation for the Naira, improving from N1,655 per dollar last Monday. Similarly, in the official market, the Naira gained N37.9, rising from N1,533.5 last week.
Currency traders told Vanguard that the current Naira appreciation is largely driven by weak dollar demand, influenced by the Chinese New Year holiday and market reactions to the Central Bank of Nigeria’s recent launch of a foreign exchange code.
A senior official of the Association of Bureaux De Change Operators of Nigeria (ABCON) confirmed that the weak dollar demand had prompted some currency traders to sell off their dollar holdings, anticipating a further decline in demand and the exchange rate, thus increasing market supply.
Further contributing to the improved supply of dollars, banks have begun fulfilling customer requests for Personal Travel Allowance (PTA) and Business Travel Allowance (BTA), a practice that had been rare before last week, according to a senior bank official.
