Just in: Naira drops to record low, hits N710/$1 at black market

The exchange rate between the naira and the US dollar has fallen beyond the N710/$1 threshold at the parallel market on Wednesday, 27th of July 2022, despite starting the day at N675/$1.

This is according to information from Bureau De Change operators in Lagos State.

Similarly, at the cryptocurrency P2P Exchange market, the rate has fallen to N702.8/$1, a 5.4 per cent depreciation compared to N667/$1 recorded in the previous trading session.

Naira has been under immense pressure in the past two weeks, falling from an average of N618 to a dollar recorded two weeks ago.

Meanwhile, in a conversation with a BDC operator at the Lagos International Airport, he stated that he sells dollars for N675/$1, while he buys from customers at the rate of N665/$1, indicating a N10 margin on every dollar.

READ ALSO: Naira weakens further against Dollar at parallel market

Exchange rate for “inflows”, a term for dollar transfers from a foreign country into Nigeria or in another account in exchange for naira locally, ranges from between N665-680 from some of the checks we conducted.

While the exchange rate is experiencing huge volatility and disparity at the unofficial markets, the Investors and Exporters window, where forex is traded officially, has also seen some level of a downtrend in recent weeks, albeit controlled.

Some BDC operators have blamed the volatility in the parallel market on the fragmented and disorganized state of the market. Some have also blamed it only for a significant rise in demand as a result of panic buying.

READ ALSO: Naira hits N660/$1 at peer-to-peer exchange market

The nation’s external reserve has also resumed downward movement after 27 days of consecutive appreciations. However, in the past one week, the external reserve has lost $138.7 million, after five consecutive days of decline.

The decline in the external reserve could be largely attributed to the intervention by the apex bank in the I&E window.

Recall that Nigeria practices a managed floating exchange rate system, which allows the Central Bank to intervene regularly in the foreign exchange market to change the direction of the currency’s float.

In the previous week, a total of $840.5 million was traded in the market, a significant improvement compared to $211.98 million and over $400 million traded in the preceding two weeks.

The improved liquidity came after the exchange rate fell to N430/$1, after which a sum of $383 million was injected into the market.

However, the rate has fallen to a year-to-date record of N431/$1 after daily forex turnover slumped to $58 million.