Naira Gains Ground in Parallel Market as Exchange Rate Improves—What It Means for Nigerians and the Economy
The Nigerian naira began the new trading week with a sign of relief for many Nigerians, as it appreciated against the US dollar in the parallel market on Monday, June 23, 2025. This development has sparked interest across financial circles, especially as currency fluctuations continue to affect everything from the prices of imported goods to the cost of doing business in Nigeria.
According to currency traders, also known as Bureau de Change (BDC) operators, in Ikeja, Lagos, the naira traded at ₦1,590 to the US dollar by the close of business on Monday. This marks a ₦10 gain compared to the ₦1,600/$1 rate recorded just last Friday. The appreciation represents a welcome development in a volatile market, especially for Nigerians who rely heavily on the parallel market due to limited access to forex through official channels.
“The naira traded at ₦1,590 to the dollar today. That’s an improvement from ₦1,600 last week Friday,” said one BDC operator in Ikeja.
Meanwhile, the story is slightly different in the official market, where the naira showed a minor depreciation. According to data published by the FMDQ Exchange, which is responsible for regulating Nigeria’s official foreign exchange market, the naira dropped slightly to ₦1,548.52 per dollar on Monday. This represents a ₦1.16 decline from last Friday’s closing rate of ₦1,547.36.
This contrast between the official and parallel market rates continues to highlight one of Nigeria’s biggest economic challenges—the wide gap between the two exchange rates.
Understanding the Parallel vs Official Exchange Rate in Nigeria
To make sense of the latest development in the naira-dollar exchange, it’s important to understand the difference between the parallel (black) market and the official market.
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The parallel market is an informal platform where currency is exchanged through BDC operators. It operates outside of the Central Bank of Nigeria's (CBN) official system but is heavily used by Nigerians due to limited access to dollars in official banks.
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The official market, on the other hand, is regulated by the CBN and includes institutional players like commercial banks, exporters, and importers. Transactions here are subject to government policies and international benchmarks.
While the government prefers people to use the official rate, many Nigerians and businesses turn to the parallel market due to bureaucratic delays, dollar scarcity, and high demand.
Why the Naira Gained in the Black Market
Several factors could be responsible for the recent appreciation of the naira in the parallel market. Analysts and forex watchers suggest that:
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Reduced Demand for Dollars: When there is less demand for foreign currency—especially the US dollar—the naira tends to strengthen. This can happen when importers have cleared their goods or when there is a lull in forex-intensive activities.
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Increased Dollar Supply: Sometimes, the CBN releases more forex into the market or BDCs receive more inflow from overseas, creating a better balance between demand and supply.
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Government Policy Measures: Efforts to curb speculation, introduce forex reforms, or engage in diplomatic currency swap deals can also improve market conditions.
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Speculative Reactions: Sometimes, when people expect the naira to fall, they rush to buy dollars—driving up demand and weakening the naira. If expectations change and people start selling dollars, the naira appreciates.
“This reversal suggests renewed market activity and potential efforts to curb dollar demand or improve forex liquidity in unofficial channels,” an analyst told NaijaRush.
The Implication of Naira’s Movement on the Economy
The rise and fall of the naira has a direct impact on everyday Nigerians. Here’s how:
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Imported Goods Become Cheaper or More Expensive: A stronger naira means it costs less to import goods, which could reduce inflation. On the other hand, when the naira weakens, importers raise prices to recover costs, making food and electronics more expensive.
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Fuel Prices: Since Nigeria still imports refined petroleum, forex rates affect pump prices. A stronger naira may ease fuel import costs.
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Foreign Investment: A more stable exchange rate can attract foreign investors. However, a fluctuating or unpredictable forex market discourages investment due to the risk of losing value in currency conversion.
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Travel and School Fees: Nigerians who travel or study abroad are heavily impacted by exchange rates. A weaker naira means they’ll pay more in naira for tuition, tickets, and accommodation.
Official vs Parallel Market Gap: A Longstanding Issue
The gap between the official and parallel market rates remains a significant challenge for Nigeria’s economic planners. As of Monday, June 23, while the official rate was ₦1,548.52, the parallel market rate stood at ₦1,590—a difference of over ₦40 per dollar.
This disparity fuels:
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Speculation and Arbitrage: Some traders buy dollars cheaply from official sources and resell them in the black market at a profit.
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Market Distortion: When the gap is wide, businesses find it hard to plan and budget accurately.
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Loss of Investor Confidence: Foreign investors may avoid bringing money into an economy with multiple exchange rates.
What Analysts Are Saying
Experts are closely watching how the Central Bank of Nigeria and the federal government will respond to the persistent disparities between the two markets.
“Analysts are closely monitoring the disparity between official and parallel market rates, which remains a major concern for Nigeria's foreign exchange stability,” NaijaRush gathered from multiple reports.
Some believe that harmonizing the exchange rates or implementing more robust forex policies could help stabilize the currency and attract foreign investments. Others argue that structural economic reforms, such as increasing local production, reducing reliance on imports, and boosting exports, are the long-term solutions.
Conclusion
The appreciation of the naira against the dollar in the parallel market on Monday, June 23, 2025, is a cautiously positive signal for Nigeria's economy. While the difference between the official and black market rates remains a critical issue, the short-term gain in the naira's value is a step in the right direction.
However, for the average Nigerian to truly feel the benefits, the country needs consistent policies, forex reforms, and increased forex availability across both official and parallel markets. Until then, many will continue watching the ever-volatile naira-dollar exchange rate to determine how best to plan their finances, imports, travel, and investments.
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