Naira gains 200 kobo at parallel market

Local currency, the naira appreciated 200 kobo to N1598/$ yesterday from the N1600/$ it stood Sunday.

This reflects the current rate at which individuals are trading dollars for naira outside of official financial institutions.

This indicates a slight improvement compared to the previous day, indicating a modest strengthening of the naira against the dollar.

The black or parallel market rate often represents the inter play of demand and supply force, as the official market is often regulated as it is obtainable in most companies.
The result is that the parallel market exchange rate is often higher than the official exchange rate because it is not regulated by the government and reflects a more immediate, fluctuating market response.

Yesterday’s exchange rate has slightly improved compared to yesterday, Sunday, May 4, when the naira exchanged at N1,600 per dollar. (This means the naira gained a bit of value against the dollar in the past 24 hours, possibly due to increased dollar supply or reduced demand.)

Analysts say that the value of a country’s currency is determined by aggregate supply and demand, influenced by factors such as national interest rates, inflation, capital flow, and the overall money supply.

These forces, both internal and external, affect the strength of a nation’s currency and contribute to exchange rate fluctuations. The most common method to assess a currency’s value is through exchange rates. The two main exchange rate systems are the fixed rate and the floating rate systems, with the parallel market rate offering a real-time reflection of currency trends.

Investors and market participants closely monitor parallel market rates for a more immediate and practical reflection of currency trends, often making it a reliable indicator of short-term shifts in economic conditions.