BrandNewsDay reports that the exchange rate between the naira and the US dollar has fallen massively to a record low on the black market, trading at a minimum of N740/$1 on Tuesday.
This is according to information from black market operatives interviewed by BrandNewsDay Nigeria in the Lagos Island, Shitta Surulere, and Ikeja areas of Lagos State, Nigeria’s commercial city.
According to FX traders, the fallen currency can be attributed to the continuous scarcity of forex and increased demand in the market. In a discussion with Mr. Ibrahim Umar, an FX trader at the Lagos Island axis, he stated that they sell dollars for an average of N740/$1 and buy for a maximum of N730/$1.
He also added that it sold for as high as N745/$1 yesterday, Monday, and has just moderated. He explained that the rising demand and continuous liquidity crunch continue to drive the exchange rate upward in the unofficial market, considering the price is determined by demand and supply.
The exchange rate has maintained a downward trend, following the move by the apex bank to raise the interest rate to a 20-year high of 15.5%, representing 150 basis points increase from the 14% stated at the previous MPC meeting.
According to an exchange rate tracker, the rate at N740/$1 is the highest on record. Indicating a market differential of N302.97/$1 between the official market and the parallel market.
Meanwhile, at the peer-to-peer cryptocurrency exchange, the exchange rate moderated to N716.4/$1 against the US dollar on Tuesday morning from N736.8/$1 recorded in the previous session.
The exchange rate at the official Investors and Exporters window closed at N437.03/$1 on Friday, 30th September 2022, the same as recorded in the previous trading session. Meanwhile, when compared to the previous week, it depreciated from N436.33/$1 recorded on Friday, 23rd September 2022.
A total of $566.21 million in FX value was traded in the official market last week, compared to $524.35 million that exchanged hands in the previous week. The highest daily forex turnover was recorded on Thursday, 29th September, when a sum of $223.3 million exchanged hands.
Despite the volatility in the unofficial market, the Central Bank has been able to maintain the stability of the currency in the official market by constant intervention, which has constrained the country’s foreign reserve.
According to the data from the CBN, Nigeria’s foreign reserve has already lost over $2 billion year-to-date to stand at $38.28 billion, from over $40 billion recorded as of the end of last year.
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