Dollar to Naira, Black Market Rate

Experts have cautioned that an increase in political activity will make the naira crisis worse.

The currency's value has continued to fluctuate on several markets, and analysts are concerned that rising political activity would put more pressure on the naira.

At the parallel market, popularly referred to as the black market, the naira had started today (August 1, 2022) at N708 to the dollar. According to 7 sell rates, the dollar to naira exchange rate on the Nigerian black market ranges from N690 to N710 with an average of 700 naira, as of July 31, 2022.

As a result of exchange rate uncertainty, firms have already started to calculate their losses.

Even though the official Import and Export (I&E) window of the Central Bank of Nigeria is still set at a minimum of N430 to the dollar, many businesses still have troubles accessing foreign currency from commercial banks, which can only fill consumer demands based on allocations from the central bank.

As illiquidity hampers trading, pressure on the local currency on the black market is rising. Dealers claimed that the pressure had marginally decreased but were concerned that the supply had not yet improved.

Some experts worry that the pressure on the naira may rise as political activity picks up, especially with the presidential elections just around the corner.

The coming months may become more uncertain for the FX market, according to professor of applied economics Godwin Owoh, who noted the historical association between the value of the naira and party politics, according to Guardian.

He claimed that the political system in Nigeria is heavily dollarized. Adding that if the naira is already under this much pressure, we can only imagine what would transpire over the next months once politicians intensify their political campaigns. This will start to have an effect on the market.

Because the exchange rate on the black market is substantially higher than what banks offer, Nigerians prefer to trade currencies, especially dollars to Naira, on the black market.

The Central Bank of Nigeria (CBN) has advised those involved in forex to contact heir local banks for FOREX before proceeding because the regulatory bank does not recognize the parallel market (black market).

Nigeria's external reserve increased in June 2022 as a result of higher non-oil exports and improved remittances from the diaspora through the CBN's RT200 and Naira4dollar programs, respectively, according to the CBN's explanation at the previous MPC meeting.