The naira closed last week with a mixed performance across Nigeria’s official and parallel foreign exchange markets, as liquidity shortages and heightened forex demand weighed on the currency.

At the National Foreign Exchange Market, the local unit appreciated marginally by 0.01 per cent to ₦1,533.57/$1, compared to ₦1,533.74/$1 the previous week, according to data from Cowry Asset Management Limited.

However, in the parallel market, the naira weakened by 0.52 per cent week-on-week, trading at an average of ₦1,545/$1. Analysts attributed the drop to a surge in demand for dollars from businesses and individuals, particularly ahead of the holiday season.

Speaking to The PUNCH, Aminu Gwadabe, National President of the Association of Bureau De Change Operators of Nigeria, identified liquidity as the main challenge in the forex market, compounded by increased seasonal travel.

“We are witnessing a spike in the market. Volatility has been there, and many factors are responsible liquidity, travellers’ demands, and other pressures on the naira,” Gwadabe said.

Nigerian banks recently resumed allowing naira-denominated debit cards for international transactions, reversing a December 2022 restriction. Gwadabe noted that the gap between the official and parallel market rates, which had narrowed in recent weeks, is now widening again.

Cowry Asset analysts forecast that the naira’s marginal gains could continue this week, supported by sustained Central Bank of Nigeria (CBN) interventions. However, they warned that global trade tensions, oil price volatility, and other external shocks could still pose risks.

AIICO Capital also credited the naira’s resilience to the CBN’s recent clearance of all outstanding FX forward contracts, a move it said had improved market confidence.

On Thursday, the apex bank announced it had concluded a forensic audit of FX forward contracts, uncovering multiple irregularities. These included mismatched company names between approved sales results and Form M records, overvalued contracts, sales for non-permissible imports, and unauthorised companies importing restricted goods such as milk.

Other breaches included blank or incorrect forex forms, sales without actual demand, and contract values exceeding the cost of imported items. The CBN confirmed that all valid claims had been settled and warned that it may take legal action against violators.

With the investigation concluded, the central bank declared the issue of undelivered forward contracts closed.