Naira hits N895/$1 at black market as Dollar scarcity persists

The exchange rate between the naira and dollar was quoted for as high as N895/$1 on the black market, the weakest in history.

A survey of major foreign currency traders in Nigeria indicates demand is still high for the greenback despite supply shortages.

On the P2P market, the exchange rate was quoted for as high as N883/$1 among buyers and sellers who rely on cryptocurrency to close trades.

Meanwhile, on the official I&E window the exchange rate closed at N775/$1 on Thursday.

The disparity between the official and parallel market rate has now widened to N120/$1 in a matter of months since the unification of the exchange rates markets was announced.

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The gap between the official and parallel market rate continues to widen as supply related challenges continue to impact the forex market and exchange rate stability.

The exchange rate disparity was a major trigger for the introduction of the revised foreign exchange market forcing authorities to ease foreign exchange controls in mid-June to simplify its monetary regime.

However, this move appears to have led to heightened volatility in the black market, driven by strong demand from manufacturers, importers, students, and travelers.

The increased volatility in the black market is mainly due to strong demand pressure from various sectors, reflecting the import-heavy nature of the Nigerian economy.

Currency speculators, intermediaries, weak oil receipts, and foreign trade deficits further contribute to the naira’s vulnerability.