Naira strengthens 7% against pound officially but black market premium persists
Nigeria's naira settled at approximately N1,825 per British pound in the official foreign exchange market, reflecting a year-to-date gain of about 7% from its starting rate of N1,949/£1. This official strengthening contrasts with the black market, where the pound trades higher at N1,880/£1 to buy and N1,905/£1 to sell, indicating persistent demand for hard currency among travelers and importers.
The naira's resilience stems from multiple factors: the Central Bank of Nigeria's sustained FX interventions and tight monetary policy (MPR at 26.5%), increased crude oil production and higher energy prices boosting gross foreign reserves, solid remittance inflows from Nigerians abroad, and the Dangote Refinery operating near full capacity (650,000 bpd), reducing dependence on imported refined oil. Additionally, S&P Global's revision of Nigeria's credit rating to 'B' with a stable outlook has attracted renewed foreign portfolio investment.
While the official rate improvement may lower costs for UK-related transactions like school fees or travel, the significant black market premium suggests ongoing pressure on forex supplies. Nigerians should monitor both rates when planning international payments, as the gap between official and parallel markets can impact actual transaction costs.