Dollar Goes For N740 In Black Market, Maintains N200 Above Official Forex Rate

As Nigerians celebrate the yuletide period, the dollar rate remains at a premium in the black market, as the naira exchanged at N740/$1 on Tuesday.

The exchange rate between the naira and the dollar in the parallel market maintains more than N200 difference when compared to the rate offered in the official market..

According to the FMDQ Securities tracking the exchange rate in the Investors and Exporters (I&E) window of the official market, the naira and dollar exchanged at N456.50/$1 as of Friday, December 23, 2022. 

This means amid the scarcity of foreign exchange (forex) in the official market, traders and individuals that are in a haste to obtain forex will have to pay N283 more than the rate offered in the official window if they intend to approach the black market. 

Prime Business Africa understands that this is one of the factors that make goods imported into Nigeria costly. The rate difference is also a major driver of inflation within the country. 

The World Bank has warned that the exchange rate difference between the official market and the black market is hurting the country’s forex market, advising the Central Bank of Nigeria (CBN) to review the rebate scheme under the ‘Race to US$200 Billion In FX Repatriation (RT200 FX)’ Programme.

According to the global financial institution, the rebate scheme which offers traders incentives to repatriate funds back to Nigeria will be taken advantage of. 

World Bank explained that, “The main component of this programme is a rebate scheme to encourage the repatriation and sale of export proceeds into the FX market. 

“Despite the good intentions of this scheme, it has, in practice, created an additional FX window with a different (subsidised) exchange rate, even if transactions are executed through the I&E window. 

“Moreover, with the rising parallel-to-official rate premium, incentives are created for agents to settle transactions outside of the I&E window at the parallel rate even after benefiting from the RT-200 rebate. This policy should be reconsidered.”