Nigerians Rush For Dollar, Push UP USD Rate Amid Naira Scarcity

The Naira lost some value against the United States Dollar (USD) in official and black markets, on Thursday, 16 February 2023.

The FMDQ Exchange, which tracks official exchange rates, reports that the value of Dollar went up by 0.11 per cent or N0.50 kobo in the official market.

In the data released, Prime Business Africa gathered that the exchange rate between the Naira and the American greenback appreciated to N462.00/$1 on Thursday.

Before settling at N462.00/$1, the exchange rate had traded as high as N462/$1 and as low as N446/$1 during trading. A day before, the Dollar exchanged for N461.50/$1. 

The depreciation of the Naira followed a drop in the supply of foreign exchange in the Investors’ and Exporters’ window. 

It was learnt that the value of the foreign exchange transacted on Thursday dropped by 22.1 per cent or $19.82 million to $69.72 million, in contrast to the $89.54 million reported after the previous session. 

In the Bureau De Change window of the black market, the Dollar was sold at N760/$1, above the exchange rate of N757/$1 offered on Wednesday, 15 February 2023. 

The dollar appreciation in the Investors and Exporters window reflects the projection of credit rating company, Fitch Ratings, which disclosed the Naira redesign policy will affect the Dollar rate this year. 

Fitch reported that the Naira scarcity caused by the Naira redesign policy will push many to demand the Dollar, thereby influencing the exchange rate.

According to the credit rating company: “The Nigerian Supreme Court’s suspension of a 10 February deadline for exchanging old banknotes into new eases, at least temporarily, the risk of intensifying cash shortages. 

“However, the demonetisation drive is still likely to be disruptive in the near term. Associated cash shortages may hit consumer spending and boost demand for foreign currency, aggravating foreign-exchange shortages.”