FX market: Naira records mixed performance as Dollar demand persists

The Nigerian naira recorded a mixed performance in the foreign exchange market on Tuesday, as sustained demand for the U.S. dollar continued to shape trading activities across both official and parallel market segments.

At the official Nigerian Foreign Exchange Market (NFEM), the local currency traded relatively stable against the dollar, supported by cautious market sentiment and controlled liquidity conditions.

Dealers noted that the currency moved within a narrow range during the session, reflecting efforts to maintain order and transparency in the official window amid ongoing reforms in the FX framework.

Dollar supply at the official market remained moderate, with transactions largely driven by manufacturers, importers, and institutional investors. This stability was viewed by market watchers as a sign of short-term resilience, despite broader macroeconomic pressures.

However, the situation appeared different in the parallel market, where the naira faced renewed pressure. Bureau de Change (BDC) operators in major commercial hubs, including Lagos, reported elevated demand for the greenback.

The surge was attributed to businesses and individuals seeking to meet post-holiday import obligations, travel expenses, and other foreign currency needs. Consequently, this sustained demand kept the naira on the weaker side in the informal segment.

Analysts observed that the divergence between the official and parallel market rates underscores lingering supply constraints and unmet demand for foreign exchange.

They pointed to seasonal factors, such as corporate obligations at the start of the year, as key contributors to the pressure on the local currency.

Looking ahead, financial experts believe the naira’s trajectory will depend largely on improved FX inflows from oil exports, foreign portfolio investments, and remittances.

They also emphasized the need for consistent policy signals from the Central Bank of Nigeria (CBN), noting that sustained liquidity support and structural reforms are crucial to narrowing the gap between FX windows and stabilizing the currency in the medium term.