Fresh concerns have emerged over renewed volatility in Nigeria’s foreign exchange market, as experts and operators link the widening gap between the official and parallel market rates to fiscal leakages, speculative trading, arbitrage activities and persistent liquidity constraints.
Market data indicate that the naira recently traded at N1,355.25/$ at the official window, while the parallel market rate hovered around N1,400/$, creating a disparity of N44.75—more than double the N21.50 gap recorded the previous month.
The development has reignited debate over policy implementation, liquidity distribution, and the structural imbalance in foreign exchange supply and demand.
The President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, attributed the distortion to what he described as an “over-appreciation” of the naira at the official market without commensurate macroeconomic fundamentals.
According to him, this has encouraged the proliferation of ungoverned foreign exchange channels that divert liquidity into the broader economy, weakening regulatory oversight and fuelling arbitrage opportunities.
“The over-appreciation of the naira is encouraging the creation of many ungoverned forex channels that are used as a conduit for the diversion of forex liquidity into the economy,” Gwadebe said.
“Speculation and arbitrage activity in the parallel market far outpace optimism in the official market. As long as there are fiscal leakages, the parallel market will continue to drive exchange rate movement.”
Forex traders also cited structural demand pressures as a key driver of the widening gap. Basir Kanjiwa, a currency trader, explained that demand for foreign exchange remains elevated due to import obligations, tuition payments, medical expenses, and travel-related transactions.
“Demand for foreign exchange remains structurally high, while supply is constrained. Many market participants hold on to dollars in anticipation of further depreciation, which tightens liquidity,” he said.
