Categories: Business

BREAKING: Naira to dollar exchange rate hits to N900/$1 at black market

The exchange rate between the Nigerian naira and the US dollar has experienced a significant decline, reaching N900/$1 on the black market. This marks a stark drop from the N840/$1 rate observed last week. The shift follows the central bank’s cautionary warning to speculators about the potential for a decrease.

Earlier in the day, the rates were trading around N865-N870/$1, indicating a notable surge in demand alongside persistent supply challenges.

In mid-August, concerns among investors grew as the dollar was quoted as low as N955/$1, fueling worries that the exchange rate could further plummet to N1000/$1.

The Tinubu administration has expressed its determination to combat the rapid depreciation of the exchange rate, backed by the central bank’s intervention commitment. Additionally, the government announced that the NNPC secured a $3.5 billion borrowing deal aimed at boosting supply amid escalating demand pressures. These actions have provided some support to the local currency, potentially leading to a reduction in the black market premium over the official I&E Window to just 5%, a development welcomed by the market.

However, recent insights from JP Morgan revealed that Nigeria’s central bank held net reserves of approximately $3.7 billion as of December 2022. This disclosure raised concerns among analysts, and the exact cause of the naira’s depreciation remains unclear.

Operators, speaking anonymously to Nairametrics, suggest that mounting demand pressures are contributing to the currency’s decline. One operator, identified as “Musa,” speculated that the brief appreciation earlier in the week was triggered by speculators’ concerns about potential appreciation. Musa emphasized that genuine demand persists but remains unmet due to unresolved supply issues.

“We have heard so much from the government but we are yet to see the dollar. Maybe when it starts to flow the exchange rate will be stronger,” Musa stated.

In another development, Nigeria’s central bank announced its plans to reintegrate Bureau De Change (BDC) operators into the forex market under revised protocols. Many analysts consider this move a prudent step to enhance liquidity at the retail level.

On August 22, trading on the official I&E window witnessed the naira-dollar exchange rate settling at N770/$1, a decrease from the previous day’s N761.32. The intra-day high reached N799.9/$1, while the intra-day low dropped to N720/$1. Market activity for the day recorded a turnover of $122 million.

Ameh Jazzia-Becky

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