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The Nigerian Naira has experienced a significant gain of 15% against the US dollar in the parallel market within just one week.
Traders in major market clusters have been quickly selling off their dollars due to fears of further depreciation of the greenback.
Some traders believe that the Naira could appreciate to around N700/$ by the weekend.
However, despite the panic selling, trading volume remains low, indicating a level of illiquidity in the market.
Many observers view the recent uptrend of the Naira as driven by emotions rather than strong market fundamentals.
If the current momentum continues, both official and unofficial markets could reach parity in the coming days.
Last week, the premium on the black market reached N200 per dollar, the highest since the market liberalization in June.
However, the current rates have narrowed the arbitrage to below N100/$.
Traders in Abuja have expressed their concerns over the losses they have incurred due to the rapid depreciation of the dollar.
On the other hand, individuals who need to buy dollars have been pleased with the recent gain of the Naira, but they question whether this trend can be sustained in the long term.
This article was updated 1 month ago