Naira Under Pressure: Parallel Market Rate Hits N1,585/$ Amid FX Volatility

The Nigerian Naira has experienced significant pressure in the unofficial foreign exchange market, with the parallel market rate reportedly reaching N1,585 to the US dollar recently, reflecting the ongoing volatility in the country’s currency landscape. While the rate has seen some minor fluctuations and slight appreciation from this point in the past few days, the figure underscores the persistent challenges in achieving exchange rate stability.

As of Wednesday, July 2, 2025, currency traders in major black market hubs across Lagos, Abuja, and other cities reported the dollar exchanging for around N1,566 (buying) and N1,576 (selling) in the parallel market. This indicates a marginal gain from the N1,585/$ mark observed earlier in the week, yet still far from the official rate.

In contrast, the Nigerian Foreign Exchange Market (NAFEM), the official window, recorded the Naira trading at N1,526.16 per US dollar at the close of business on July 2, 2025. This persistent gap between the official and unofficial rates continues to fuel concerns among economists and businesses.

Market analysts attribute the Naira’s continued struggles in the parallel market to a combination of factors, including persistent demand-supply imbalances, speculative activities by currency hoarders, and insufficient dollar liquidity. Despite recent foreign exchange reforms by the Central Bank of Nigeria (CBN) aimed at unifying the exchange rates and boosting dollar inflows, the market remains susceptible to pressures.

The depreciation has significant implications for the average Nigerian and the broader economy. It translates to higher costs for imported goods, including essential commodities, fuel, and raw materials for industries, exacerbating inflationary pressures and eroding the purchasing power of citizens. Businesses, particularly those reliant on imports, face increased operational costs and planning uncertainties.

The CBN has been actively working to stabilize the market through various interventions and policy adjustments. Recent reports indicate some sustained foreign portfolio investment inflows, particularly into Nigeria’s fixed income market, which had offered a glimmer of hope for the Naira. However, these inflows have not been sufficient to fully bridge the demand-supply gap in the parallel market.

The continuous oscillation of the Naira against major international currencies highlights the need for more sustainable long-term solutions, including increased local production, diversification of export revenues, and policies that attract durable foreign direct investment, to ensure a more stable and resilient currency for Nigeria.