Naira Hoarders Drive Exchange Rate Past N800/$1 At Black Market
Despite some publications reporting the exchange rate as N865/$1, the media says that the naira-to-dollar exchange rate dropped to N800/$1 on Monday.
The naira has dropped from its initial record low of N765/$1 after the apex bank issued this pronouncement last week, shedding more than N30 in three days and adding pressure to an already falling currency.
The difference between the official and black market values, which is N352, is N443/$1, according to the favored NAFEX market of the central bank.
According to reports, naira hoarders who are rushing to swap their naira hoarded outside banks for dollars ahead of the deadline are to blame for the market’s fluctuating exchange rates.
Following the Central Bank of Nigeria’s (CBN) announcement that the freshly redesigned naira notes would begin circulating in the economy on December 15, 2022, the local currency in Nigeria is currently facing intense selling pressure on the black market.
Rate discrepancy – Despite the continued promotion of rates through various media channels, actual trades are conducted at different rates.
For “inflow,” a word for a forex transfer other than cash, it is thought that traders sold forex at a rate of roughly N785 to $1.
It is stated that in order to meet greater demand from hoarders, cash-based trades were sold at a higher premium.
The prices for cash and influx varied widely throughout different regions of the nation, further fracturing the unregulated underground market for foreign exchange.
Many banks did not have enough inventory to sell, and those who had held onto their stock in anticipation of more depreciation claimed that there was a lack of supply, which led some dealers to voice their complaints. The limited supply of dollars suggests that the exchange rate will decline much further.
Nigerians leaving the country for Canada and other western countries, students studying abroad, importers, speculators, and businesses seeking to repatriate foreign exchange are among the buyers.
While there are many different customers, there are very few vendors, who are largely exporters and few Nigerians living abroad.
As the central bank’s deadline for hoarders to deposit their cash hoards draws near, pressure on them to do so remains intense.
According to reports, the majority of black market traders are cautious when receiving cash in return for dollars out of concern for being interrogated by banks and the EFCC.
The new currencies will go into use on December 15, 2022.