Exchange Rate Goes Gaga in The Black Market, Confuses Traders
- The fall of the Naira is creating confusion among black market operators in Nigeria
- According to current market surveys, the operators are not certain what is the current exchange rate
- They depended on each other to know the exact rate as CBN reports a shortage of forex in the market
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Parallel market operators in Nigeria are in confusion as the Naira has continued to depreciate against the US dollar.
The fall of Nigeria’s currency, the Naira, has increased uncertainty among traders as they find it hard to determine the actual exchange rate.
Source: Getty Images
No one knows for sure what it is
Exchange rate confusion in Nigeria’s black market, where the Naira is trading without official and government regulation, usually creates opportunities for some and creating losses for those without knowledge of the optimum price.
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The Naira has fallen by about N190 per dollar to date from an average of N565 per dollar on December 2021 and currently trading at N750 per dollar, depending on the area and the trader.
However, it is becoming difficult for operators to know the exact current rate of the Naira and rely on each other to get updates about the actual rates.
According to report, as of Monday, October 25, 2022, operators mentioned different rates and relied mostly on their colleagues to sell to buyers.
The parallel market rate has been volatile and disparate in pricing since the central bank stopped the sale of forex to BDC operators in July last year.
CBN plays the blame game
The CBN blamed the speculative activities of the BDC operators for the ban. The move has since reduced the amount of forex in circulation or trade in the parallel market.
The continued scarcity of FX in the country has since seen the local currency lose against the dollar on a massive scale and rates hike by the CBN, coupled with crippling inflation.
Nigeria’s inflation is currently at a 17-year high of 20.77 per cent, the highest since 2005. The inflation is due to the falling currency and the global energy crisis caused by Russia’s invasion of Ukraine.
The CBN has increased the interest rates three consecutive times to 15.5 per cent to curtail the rising cost of living.
The official exchange rate falls
The current official exchange rate was put at N441.67 per cent to a dollar on Friday last week compared to N4416 per dollar recorded the week before.
The fall has been due to the FX shortages amid dwindling inflows and the dearth of remittances from the Nigeria National Petroleum Company Limited (NNPC).
Naira falls to record low against US dollar in 2022 at official market as oreign reserves fall
Recall that Legit.ng reported that Nigeria's currency, the Naira, has continued to fall in value against the US dollar, and it is now officially at its lowest level at the official market.
According to FMDQ securities, Nigeria's currency, the Naira, fell on Wednesday, September 7, closing the day at N436.50 per dollar at the Investors and Exporters (I&E), the country's official foreign exchange market window.
This is the third-consecutive day of record-breaking depreciation, following Monday's close at an 8-month low of N434.7 per dollar and Tuesday at N436.
Source: Legit.ng
