FX disparity widens as Naira trades at N1000 at black market

There are mounting concerns that the widening disparity between the dollar and naira may be triggering a new wave of forex round-tripping.

Currently, the black-market exchange rate is going for N1,000/$1 compared to the official rate of N770/1$ suggesting a wide N230/$1 disparity.

The naira appreciated in the investors’ and exporters’ window of the official market on Tuesday after the dollar rate settled at N755.08/$1 by end of trading hours.

According to FMDQ Exchange, the naira to dollar rate contrasted with the N773.25/$1 reported at the close of trading on Monday.

The authorised dealers brought the price of the dollar down by N18.17 kobo. This indicates the value of the Nigerian currency appreciated by 2.34 per cent.

But before the official foreign exchange market closed on Tuesday, the authorised dealers and their clients traded the dollar at a high rate of N851/$1 and low price of N700.

Meanwhile, in the black market, the naira depreciated in value by N5, as the price of the United States currency increased from N995 l/$1 to N1000/$1.

READ ALSO: Naira sinks, exchanges at N1,000 per dollar

The price of the pound was also increased in the parallel market, as it cost buyers N1265/£1, compared to the N1260/£1 the British currency was sold the previous day.

Forex dealers in the black market also hiked the cost of the euro, after the European currency was offered to the public at the rate of N1055/€1, up from N1045/€.

Amidst this backdrop, suspicions are growing that a segment of customers may be taking advantage of the I&E window for round tripping activities.

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Sources within the financial sector said the trend underscored the potential vulnerability the wide gap poses for forex stability in the country, suggesting that forex roundtripping could well be taking place.

One of our sources suggests that currency round tripping may be a significant contributor to the existing market distortions, further exacerbating the scarcity of the dollar an

This unsettling trend has brought to the forefront concerns over a potential surge in currency round tripping activities, as sources indicate some forex buyers may be exploiting the Interbank Foreign Exchange (I&E) window for personal gains, igniting fears of dire economic consequences.