Naira Depreciates To N1,490 Per Dollar, Official–Parallel Rate Spread Widens

The naira depreciated to N1,490 per dollar in the parallel market during the third trading week of January 2026, widening the exchange rate gap with the official market to its highest level in 11 months. This development reflects sustained pressure in Nigeria’s foreign exchange market, despite a marginal appreciation recorded at the official window.
According to data from the Central Bank of Nigeria’s official market update, the naira closed at N1,417.95 per dollar in the Nigerian Foreign Exchange Market (NFEM) on Friday, improving slightly from N1,424.5 per dollar recorded a week earlier. The modest gain, however, contrasted sharply with movements in the parallel market, where the currency weakened further.
In Abuja’s parallel market, the naira traded between N1,489 and N1,490 per dollar, down from N1,477 recorded on January 9. This movement pushed the gap between the official and parallel markets to approximately N73, the widest spread since February 2025. Market participants attribute the widening disparity to persistent foreign exchange demand and limited supply, particularly outside the official window.
The slight appreciation in the official market coincided with a modest improvement in Nigeria’s external reserve position. The CBN reported that gross foreign exchange reserves closed the week at $45.8 billion, compared with $45.6 billion in the previous week. The gradual build-up in reserves has been linked to inflows from crude oil exports and renewed portfolio investment activity.
Despite the reserve accretion, pressure on the naira remains evident across both market segments. Analysts note that demand for foreign exchange continues to outpace supply, driven by import requirements, offshore obligations, and unmet demand from businesses and individuals unable to access dollars through official channels. This imbalance has sustained activity in the parallel market and widened the pricing gap.
The current divergence mirrors trends observed toward the end of 2025, when the exchange rate gap between the two markets expanded significantly. At year-end, the naira traded at about N1,470 per dollar in the parallel market, while the official rate settled around N1,429 per dollar. This represented the widest disparity since February 2025.
Earlier in that period, on February 5, 2025, the official exchange rate closed at N1,499 per dollar, while the parallel market reached as high as N1,605 per dollar. In subsequent sessions that month, the official rate briefly traded weaker than the parallel market, highlighting volatility in FX pricing and liquidity conditions.
The re-emergence of a widening gap underscores ongoing structural challenges within Nigeria’s foreign exchange framework. The spread between official and parallel rates is widely monitored as a barometer of market stress. A widening differential typically signals increased arbitrage opportunities, higher unmet demand at the official window, and rising reliance on the bureau de change segment.
Historically, prolonged gaps between the two markets have exerted pressure on the official rate, often pulling it closer to parallel market levels. In response, the CBN has deployed various measures, including direct forex interventions, tighter monitoring of FX transactions, and policies aimed at curbing speculative demand.
Nigeria’s foreign reserves have remained above the $45 billion mark since January 2026, providing some buffer for exchange rate management. The CBN continues to publish official rates that guide transactions for banks and licensed BDCs, with investors and businesses closely tracking movements across both markets for pricing and planning decisions.
Recent macroeconomic indicators also factor into currency expectations. Inflation eased to 15.15 percent in December 2025 following a revision in data methodology by the National Bureau of Statistics. While the lower inflation print offers some relief, market participants remain cautious, noting that exchange rate stability will depend largely on sustained FX inflows, improved liquidity, and effective policy coordination.
Overall, the latest movements suggest that while Nigeria’s external buffers are improving gradually, the foreign exchange market remains strained by demand-side pressures, leaving the naira vulnerable to further volatility in the near term.