Naira Crashes to N895/Dollar on The Black Market as N120 Disparity Between Official Market Ruins FG’s Plan
- The naira has crashed to an all-time low of N895 to a dollar at the black market
- According to Black market traders, the demand for the dollar intensified as people sought to travel and import products into the country
- At the official Investors and Exporters (I&E) window, the naira was exchanged for N775 to a dollar on Thursday, August 3, 2023
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The Nigerian naira has crashed to an all-time low of N895 to a dollar at the parallel market, otherwise known as the black market.
The information on the foreign exchange aggregator website, Abokifx, shows that the exchange rate crashed to its lowest in Nigeria’s history at the black market on Friday, August 4, 2023.
Source: UGC
Naira crashes to the lowest in history
The naira began trading at the parallel market at N880 before nose-diving to N895, the lowest it has ever fallen.
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A study of major foreign currencies in Nigeria shows that demand for the US greenback is still high amid shortages caused by low Forex inflows and slowed diaspora remittances.
At the official Investors and Exporters (I&E) window, the naira fell to N775 to one dollar on Thursday, August 3, 2023, after recovering by 6.03% on Wednesday, August 2, 2023.
With the current exchange rate, a disparity of N120 exists between the official and parallel markets, thus ruining the FX unification plans of President Bola Tinubu.
Experts blame federal government's policy for naira's fall
Experts say this is the highest it has grown since the Nigerian government embarked on unifying the foreign exchange markets.
There have been warnings that the federal government should be cautious so the black market does not drift further apart from the official rate and frustrate government efforts to woo investors and attract foreign exchange.
Banker and investment analyst Justin Iwuchkwu told Legit.ng that the development is due to a recent policy in the 2023 Finance Act, mandating banks to seek Tax clearance certificates from forex seekers before accessing FX.
“This policy was designed to forestall money laundering, but it works against the government. Those who cannot provide tax clearance certificates are flooding the black market in search of dollars.”
Iwuchukwu also revealed that the 43 banned items by the Central Bank of Nigeria from accessing FX also contribute to the high demand for dollars at the black markets.
“If you remove the restrictions placed on these items, the importers of these items could have access to FX at the official rate and bridge the gap between the official and black market,” he said.
CBN has no experience to manage naira float
He said the federal government should have simplified the process by requesting such documents as valid identification and other easy-to-obtain IDs.
Recall that the Economist Intelligence Unit (EIU) of the British publisher, the Economist, has said the Nigerian apex bank, CBN, lacks the experience to manage the naira float and forecasted that the official exchange rate would eventually moderate at N860 to a dollar.
Naira gains whopping N12.31 despite dollar shortage, reversing back to N700 per dollar
Legit.ng reported that the Nigerian currency, the naira, gained a whopping N12.3 despite the shortage of Forex at the official Investors and Exporters (I&E) window on Wednesday, August 2, 2023.
The I&E window recorded a 6.01% gain amid a dollar shortage resulting from low Foex inflows from oil earnings, remittances, and foreign capital.
Data from FMDQ revealed that at the end of trading on Wednesday, August 2, 2023, the dollar was quoted at N741 per dollar as against N789.08 per dollar on Tuesday, August 1, 2023, at the I&E window.
Source: Legit.ng
