Naira Holds Firm as Official FX Window Outperforms Parallel Market

Naira Holds Firm as Official FX Window Outperforms Parallel Market 

The naira maintained a broadly steady performance on Tuesday as improved liquidity in the Nigerian Foreign Exchange Market (NFEM) helped anchor the official exchange rate below parallel-market levels.

Data from the NFEM showed that the volume-weighted closing rate settled at ₦1,448.03 per US dollar on November 18, marking a mild ₦5.60 decline (-0.39%) from the previous session. Despite the dip, the official window continued to price the naira stronger than the street market.

Across key cash-exchange hubs, parallel-market trackers quoted the dollar between ₦1,455 and ₦1,460, leaving a modest ₦7–₦12 premium above the official rate. Traders say immediate access to physical dollars and retail-level demand continues to keep cash quotes elevated relative to the NFEM benchmark used for corporate and institutional transactions.

The NFEM — also referenced as NAFEM or the I&E/NAFEM window — remains the primary indicator for regulated FX flows, reflecting actual interbank trading activity. Meanwhile, the parallel market captures the retail, informal end of the spectrum where small-scale buyers, travellers, and cash-driven businesses source dollars.

Analysts note that FX conditions have been steadier this quarter as the Central Bank of Nigeria’s earlier policy rate cut in September helped ease borrowing costs and improve market liquidity. Coupled with better foreign-currency inflows and cooling inflation pressures, the measures have softened the sharp volatility episodes seen through 2024 and early 2025.

Import-dependent firms and large corporates remain the biggest beneficiaries of the NFEM pricing, accessing dollars at a more favourable official rate. However, individuals, small traders, and those needing physical cash continue to grapple with the parallel-market premium.

For remittance recipients and travellers, the difference between formal banking channels and informal FX kiosks can significantly alter how much naira value they ultimately receive.