Black Market Naira Gains As BDC Operators Drop Dollar

Naira and Dollar

October 11, 2022 Dollar Rates Update: The Bureau De Change operators reduced their asking price for dollar sales on Tuesday, with the naira gaining against the United States currency in the black market.

It was gathered that the traders cut down the price to sell a dollar by -0.14%, as the exchange rate between the naira and the American greenback was put at N730/$1.

A day before, the dollar exchanged by N731/$1 in the black market. This indicates demand pressure is wearing off in the parallel market which has been cut out by the Central Bank of Nigeria (CBN) from obtaining forex from banks.

The central bank-led Godwin Emefiele had cut ties with the Bureau De Change operators in July 2021, with the CBN stating that it was to ensure the maintenance of the country’s foreign reserves as well as the stability of exchange rates.

Although, the CBN also accused the black market of sharp practices that flouts the stipulated regulations of the financial regulator, “Governor noted that BDCs had reneged on an earlier understanding to make marginal gains on FX sale allocations to them by the Bank and chosen the path of greed which left the average Nigerian reeling in unnecessary pain and avoidable agony while BDC promoters made abnormally high prots.” CBN wrote in its publication.

Prior to the ban, Emefiele said Nigeria was the only country still selling forex to Bureau De Change operators across the world. Over 5,500 BDCs were receiving $20,000 weekly allocations.

This amounts to a total of $110 million per week, but the central bank said it was unsustainable. Since the ban, the Bureau De Change operators have been hit with scarcity and overwhelmed by high demands.

Meanwhile, in the official market, the exchange rate between the naira and the dollar is N439.17/$1 as at Friday, surpassing the rate both currencies traded a day before, which was N436.63/$1. The rate for Monday is unavailable due to the public holiday.

Fakoyejo Olalekan