Nigeria’s exchange-rate convergence drive is facing renewed pressure as the gap between the official and parallel markets widens beyond 6 per cent, reviving concerns about speculative activity and FX arbitrage.

Data from the Central Bank of Nigeria (CBN) and surveys of parallel market traders show that the disparity stood at about 6.4 per cent mid-week, equivalent to roughly N94.

The gap had briefly crossed the N100 mark toward the end of January, underscoring persistent liquidity frictions in the foreign exchange market.

While the official market is showing signs of short-term stabilisation, the elevated premium highlights the difficulty of achieving full alignment between the two segments.

What the data shows

Mid-week trading reflected mixed movements across the FX markets. The naira strengthened at the official window but posted a mild depreciation in the parallel market, pointing to relative stability but only gradual convergence.

At the official Nigerian Foreign Exchange Market (NFEM), the naira closed at N1,359/$ on Wednesday, January 3, 2026, improving from N1,367/$ on Tuesday and N1,384.5/$ on Monday.

In contrast, the currency traded at N1,453.13/$ in the parallel market on Wednesday, January 3, 2026, weaker than N1,445/$ recorded a day earlier, according to a survey.

This left the official-parallel market spread at N94, slightly narrower than the N96 recorded a week earlier, but still wider than levels seen late last year.

The brief surge above N100 in late January reignited concerns that arbitrage opportunities could encourage speculative demand for foreign currency.

Liquidity pressures and market signals

The persistence of the exchange-rate premium suggests that liquidity constraints remain a key challenge, even as reforms improve price discovery in the official market.

Nigeria’s external reserves stood at $46.59 billion as of February 2, 2026, offering near-term support for exchange-rate stability and the CBN’s intervention capacity.

However, analysts note that reserves alone may not guarantee convergence if FX supply and demand dynamics remain uneven across market segments.

Progress made, but risks remain The exchange-rate gap is a critical barometer of FX stability, as wide differentials often fuel speculation and distort pricing.

According to the CBN, FX reforms introduced over the past two years helped narrow the premium between the official market and Bureau-de-Change rates to 2.11 per cent as of December 9, 2025, from as high as 62.23 per cent in May 2023, before the reforms.

Nairametrics data shows that the disparity stayed below 5 per cent for most of 2025 before edging higher in early 2026.

Encouragingly, the parallel market has also shown signs of strength, with the naira appreciating from around N1,490/$ to N1,453/$ within a week.

Outlook for 2026 naira-falls

In its 2026 macroeconomic outlook, the CBN projected that the exchange rate would remain broadly stable, supported by rising diaspora remittances, improved oil receipts, and stronger investor confidence.

The Bank, however, warned that a sharp deterioration in global financial conditions or sudden capital reversals could re-ignite volatility.

External reserves are projected to rise to $51.04 billion in 2026 from $45.01 billion in 2025.

In addition, Dangote Refinery’s planned capacity expansion to 700,000 barrels per day in 2025, with a longer-term target of 1.4 million bpd, is expected to reduce fuel imports and ease FX demand.

Together, these factors could strengthen Nigeria’s external sector through 2026, though sustained convergence will depend on consistent liquidity and disciplined market reforms.