Black Market’s Dollar Rate Now N290 Above Official Market

The Naira to Dollar exchange rate in the official market depreciated on Tuesday, 14 March 2023, as the Nigerian currency regains some value lost to the United States legal tender in the last couple of days.

Prime Business Africa gathered from FMDQ Exchange data that the Naira appreciated in value by N0.25 kobo or 0.05 per cent during trading.

At the end of Tuesday’s session, the Naira and the Dollar exchanged for N461.42/$1. This is below the exchange rate of N461.67/$1 reported on Monday, 13 March 2023. 

This publication learnt that at some point during forex trading in the official market, the exchange rate rose as high as N462.18 to one Dollar. The lowest rate for the day was N446/$1 before closing at N461.42 for one Dollar.

The exchange rate fell to N461.42 as investors and exporters traded $113.44 million worth of foreign exchange in the official market.

FMDQ Exchange reported that the value of foreign exchange traded by investors and exporters was 46.11 per cent or $35.80 million above the $77.64 million they exchanged during trading on Monday. 

The official market has been said to be unrealistic due to the influence of the Central Bank of Nigeria (CBN) in the movement of the exchange rate compared to that of the black market where market forces determine the movement of the forex rate. 

In the black market, the rate is N290 more than the price of the Dollar or worth of the Naira in the official window, where the Dollar rate is N752/$1 as of Wednesday, 15 March 2023. 

Due to the absence of the central bank’s control in the Bureau De Change window of the black market, the sentiment among many is that it reflects reality more than that of the Investors and Exporters window.

This is why there have been debates that the Naira is overvalued in the official market, and to ensure it meets reality, the World Bank and the International Monetary Fund (IMF) have urged the CBN to reduce its intervention in the official market whenever forex shortage hots. 

Currently, both the official and black markets are struggling with forex shortage, however, the latter gets forex support from the CBN, while the former has not been receiving aid from the financial regulator since 2021.