The Nigerian currency, Naira, fell to the dollar on Wednesday, in the black market segment of the foreign exchange channels, depreciating by -0.2% at the end of trading activities in the peer-to-peer market.
On Tuesday, the Naira had closed at N615 to one dollar, but the following the day, the cost of buying $1 rose to N616, as traders in the black market added N1 to their asking price, as demand for the United States currency grew.
The Nigerian currency has remained weak due to the scarcity of dollar in the peer-to-peer market, following the Central Bank of Nigeria (CBN), pulling the black market out of its forex disbursement destination.
CBN had announced in June last year, that it will no longer sell foreign currencies to the black market, accusing them of using their channel to aid money laundering and other illicit financial activities, which the Bureau De Change operators have denied.
The BDC operators have had to depend on sourcing forex directly from individuals or companies not willing to use the official forex trade channel of the Investors and Exporters (I&E) window. This has seen demand outweigh availability of FX, hence, the dollar gaining value against the naira.
However, the story is not same in the Investors and Exporters (I&E) window, as the Naira gained 0.18%, which represents N0.75kobo. The Nigerian currency appreciated against the dollar, hitting N420/$1 on Wednesday, having traded N420.75/$1 on Tuesday.
This comes after over $9.54 million was traded in the central bank-backed foreign exchange window, increasing the turnover from $115.08 million recorded on Tuesday, to $124.62 million the next day.
With limited forex available in the black market, compared to the official CBN forex channel, the rising demand for dollar is expected to further play in favour of the U.S currency, pressuring the Naira into a downward path.
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