Naira FX gap widens to N90 as demand for dollars rises ahead of 2027 elections, but the naira remains broadly stable in official and black markets

Nigeria’s naira has reached a five-month high of N1,497.46 against the US dollar, even as the gap between the official and parallel foreign exchange rates widened to over N90, the largest divergence since the currency was unpegged in 2023 by President Bola Tinubu.

Also read: Naira shows strong resilience, gains against dollar in January

Analysts say the widening gap is driven by increased demand for physical dollars, as political actors reportedly stockpile cash in preparation for the 2027 general elections.

Despite this surge in demand, the naira has maintained broad stability and has strengthened in both official and parallel markets, supported by higher dollar supply.

Data from local forex platforms indicate that while the parallel market remains sensitive to speculative demand, the official market benefits from interventions by the Central Bank of Nigeria and commercial banks to ensure liquidity.

Economists warn, however, that sustained divergence between official and parallel rates could signal underlying vulnerabilities in the forex market, especially with political uncertainty and election-related cash hoarding expected to continue through 2026.

Market participants also note that rising foreign exchange supply, combined with moderate demand from businesses and importers, has cushioned the naira from severe depreciation despite the unusually wide spread.

The Central Bank has previously stressed that exchange rate management will focus on stability, ensuring that volatility in the black market does not unduly affect official rates or investor confidence.

Also read: Pound weakens as Naira shows calm strength in FX market

With election season approaching, currency experts expect the FX gap to remain a key indicator of market sentiment, highlighting the delicate balance between supply, demand, and policy measures.