Naira Gains Ground In Official And Parallel Fx Markets

The naira continued its upward trajectory on Tuesday, appreciating against the dollar across both the official and parallel markets. At the Nigerian Autonomous Foreign Exchange Market (NAFEM), the currency closed at ₦1,579.28 per dollar, a modest improvement from Monday’s ₦1,581.58. This builds on Monday’s ₦4.57 gain from Friday’s rate of ₦1,586.15, reinforcing the currency's positive momentum.

In the parallel market, the naira also strengthened, closing at ₦1,595 per dollar—up from ₦1,615 the previous day. On Monday, the naira had gained ₦13 from Friday’s ₦1,628 rate, signaling a continued rally.

Analysts attribute the sustained appreciation to increased foreign portfolio inflows and rising demand for the naira ahead of the Eid el-Kabir holidays scheduled for June 6 and 9, 2025. The festive season has likely spurred higher dollar supply across various channels.

A research note from Coronation Merchant Bank highlighted a week-on-week drop in total FX inflows at NAFEM, which declined to $1.04 billion from $4.42 billion. Despite the fall, foreign portfolio investors (FPIs) remained the dominant contributors, accounting for 32.02% of inflows. Non-bank corporates followed with 29.49%, while the Central Bank of Nigeria (CBN) contributed 19.71%. Exporters and other sources made up 18.33% and 0.45%, respectively.

The recent gains reflect improving investor sentiment and a more favorable foreign exchange environment. However, analysts caution that the naira's stability hinges on sustained inflows and supportive monetary policies.