Naira Rises Above N600/$1 At Parallel Market, See New Exchange Rate

Naira Rises Above N600/$1 At Parallel Market, See New Exchange Rate

In May 19, 2022, a new currency rate emerges on the parallel market.

Touchaheart Nigeria reports that the official currency of Nigeria, the Naira, declined to N604/$ on the parallel market, often known as the black market, from N565 at the start of 2022. This is in line with a YTD loss of N39.

This online news platform understands that the naira’s depreciation against the dollar is based on information obtained from Nigerian Bureau de Change operators, who attribute the rise in dollar demand to the election season, as Nigerian politicians stockpile dollars ahead of the country’s primary elections, which begin this weekend.

Read More: Black Market Dollar To Naira Exchange Rate Today 19 May 2022

Despite worldwide requests for the Naira to be fully floated, the Central Bank of Nigeria (CBN) has maintained its controlled float policy. As a result, the black market depreciation of the Naira has increased the gap between the official Investors and Exporters (I&E) window and the black market.

The CBN fixes the exchange rate in the I&E window at roughly N418 through intervention backed by external reserves. As the Naira continues to fall, the gap between the I&E and the illicit market has grown by N188.

What Experts Are Saying

The volatility in the FX market, according to Anwar Usman, a BDC operator in Lagos, is due to a shortage of forex supply, while demand has risen sharply in recent weeks.

“Dollar demand has increased significantly, especially since the election is fast approaching, which is why the exchange rate has gone up,” a report filed by Nairametrics quoted the BDC operator to have said.

Also, the Director of the Abuja-based Centre for Democracy and Development, Idayat Hassan, stated that Politicians in Nigeria have a history of buying votes at party primaries going as far back as the 1993 elections.

He said, “I think we’re just seeing the beginning of the rising of the dollar because as we move closer to the primaries and the parties are trying to put their houses in order, the value of the dollar will also trade up.”

What You Should Know

• Nigeria’s external reserve fell further below the $39 billion thresholds on Tuesday as the level recorded a 0.09% decline to stand at $38.88 billion from $38.92 billion recorded as of the previous day. The decline in the external reserve level can be attributed to the continuous intervention by the Central Bank in the FX market to ensure the stability of the local currency
• The CBN also stated that Nigerians’ import dependency is the cause of the falling Naira. Mr. Osita Nwanisiobi, CBN Director of Corporate Communications, claimed that Nigeria’s over-dependence on imports was one of the reasons for the currency’s depreciation.
• “No successful economy thrives on the promotion of imported products over the exportation of locally manufactured products,” he said.
• Nigeria’s capital inflows plummeted to a four-year low of $9.66 billion in 2020, only to drop further to $6.7 billion in 2021.

Meanwhile, Touchaheart Nigeria says that as Nigeria went through its historical trading depict, international trade remained a prominent concern. Nigeria’s international trade balance for 2021 has slipped to a record-high deficit of N1.94 trillion.