The naira has depreciated against the dollar in the parallel market, increasing the disparity with the official exchange rate.

This decline follows a suspension of foreign currency supply to local bureaux de change, which has triggered a rush for dollars.

On Friday, the naira fell by 1.1%, reaching 1,643 naira per dollar, compared to 1,625 naira the day before, as reported by Abubakar Muhammed, CEO of Forward Marketing Bureau de Change Ltd. in Lagos, which tracks this data. The difference between the official rate and the parallel market rate has now widened to approximately 2.7%, based on FMDQ data from Bloomberg.

As the most populous country in Africa, Nigeria is facing a severe shortage of foreign exchange, leading to multiple exchange rates and a withdrawal of foreign investors.

Since taking office last year, President Bola Tinubu has permitted the naira to trade more freely in an effort to reduce the exchange-rate disparity and attract investment.

Recent policy adjustments, including addressing a backlog of unmet dollar requests and facilitating dollar sales to bureaux de change, had previously narrowed the gap between the two rates to between 1% and 2% before this week's increase. This is a significant improvement from the roughly 20% spread observed in May.

The central bank, based in Abuja, periodically sells dollars to exchange bureaux to meet the demand from retail clients, such as those needing funds for personal travel and medical expenses abroad. These sales are also intended to stabilize street prices and reduce the gap with the official rate available through banks.

However, the most recent dollar sale to currency traders in mid-July has been exhausted, once again exerting pressure on the naira, as noted by Aminu Gwadabe, president of the Association of Bureaux de Change Operators of Nigeria, which represents retail currency traders.

Gwadabe stated via phone that the central bank ought to “reinitiate dollar sales to address the concerning levels of price volatility.” He added, “There is a significant demand for non-visible transactions such as tuition fees, travel allowances, and medical costs, particularly as students prepare to return to school.”