Naira Appreciates In Parallel Market As Dollar Trading Volume Rises

The Naira appreciated in the parallel market on Monday, October 21, reaching ₦1,715 per dollar, up from ₦1,725 per dollar recorded over the weekend. However, in the Nigerian Autonomous Foreign Exchange Market (NAFEM), the Naira weakened, falling to ₦1,603.16 per dollar.

According to data from FMDQ, the indicative exchange rate for NAFEM dropped from ₦1,600.78 per dollar the previous Friday, reflecting a depreciation of ₦2.38. Despite the depreciation, dollar trading volume in the official market increased by 2.4 percent, rising to $359.22 million from $350.72 million the previous weekend. This caused the gap between the parallel market rate and the NAFEM rate to shrink to ₦111.84 per dollar, down from ₦124.22 per dollar the previous Friday.

In a related development, Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), discussed the advantages of a weak Naira during last week’s Nigerian Economic Summit (NES) in Abuja. He explained that the depreciation of the currency could offer some benefits by boosting Nigeria’s export potential. Cardoso highlighted that despite the challenges posed by the low exchange rate, it creates an opportunity for Nigeria to become more competitive in the export market.

Cardoso encouraged both local and foreign investors to take advantage of the current situation, stressing that the weaker Naira presents investment opportunities. “It may seem like a threat… but that also is an opportunity because what that means is that it can help to boost your exports,” he said. He also emphasized that the low Naira could lead to increased exports, as countries looking to trade with Nigeria would find it more cost-effective. Cardoso reassured that while the economy is adjusting, there is growing interest in the opportunities available, and investment in Nigeria’s export sector is increasing.

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