Traders Blame Binance as Naira Crashes to N910 to a Dollar, Experiences Worst Performance Under Tinubu

Traders Blame Binance as Naira Crashes to N910 to a Dollar, Experiences Worst Performance Under Tinubu

  • The naira has fallen to N910 to a dollar on the black market as pressure on the dollar continues
  • Experts have blamed the recent CBN policy mandating banks to demand Tax Clearance Certificates from FX seekers
  • However, Forex dealers have called for Nigeria to ban the operations of Binance in Nigeria

The exchange rate between the naira and the dollar fell as low as N910 to a dollar on the black market.

Dealers quoted rates as high as N910 on Wednesday, August 9, 2023, as they continue to cite higher demands as the reason.

Naira, Binance, Dollars
For illustration purposes only. Depicted person has no relationship to events described in this material. Credit: Bloomberg / Contributor
Source: Getty Images

Naira loses highest value in August

The Nigerian currency depreciated by 4.37% on the parallel market in the first week of August. The Exchange rate dropped by 11.5% in the whole of July 2023.

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On Tuesday, August 8, 2023, the exchange rate crossed the N900 to a dollar threshold for the first in history and has continued on the trajectory.

However, higher demands have piled pressure on the dollar on the parallel market as bidders demand higher bids.

The British pound and euro also increased to N1,171 and N872, respectively.

Investigation reveals that the recent Central Bank of Nigeria policy mandating banks to demand Tax Clearance from customers seeking foreign exchange has exacerbated the forex issue.

According to a Forex expert, Magdalene Ohire, the policy is working against the plan of the Nigerian government to unify the foreign exchange windows.

She said the parallel market is slipping further away from the official market and destroying plans to close the gap.

She said:

"Currently, the gap between the official and parallel market is over N150, and dealers will prefer to sell their dollars to the highest bidder, in this case, the black market operators."

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She revealed that the policy is a wedge in the plans to unify the foreign exchange windows.

Dealers call for Binance ban in Nigeria

Meanwhile, the Chairman of Bureaux de Change Operators, Aminu Gwadebe, has called the Nigerian government to bar Binance, Nigeria's crypto exchange platform operations.

Nairametrics reported that Gwadebe said Binance growing influence is the reason for the fall of the naira.

He said the platform is the meeting point for investors and exporters, including the parallel market.

"So, we have to do something that can stop Binance. It's a competition; we need to ban Binance, and the only way to do so is if you have liquidity.
"As I speak, Binance is the most liquid market; they do 1.2 million transactions per second. So it's a very liquid market, but that is not a scary status; we can break it through our local content and peculiarities." Alhaji Aminu Gwadebe

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As of Wednesday, August 9, 2023, the exchange rate in Binance is quoted as high as N916 to a dollar.

There are speculations that Forex dealers buy cryptocurrencies, especially bitcoin, and sell them on Binance to earn extra dollars.

With the current exchange rate, the gap between the official and black market rates has widened to N153 to a dollar, which Ohire said would be difficult to close in the coming months.

Buyers flood black market for dollars as CBN sets strict FX guidelines for Nigerians, banks comply reported that Many forex buyers have opted for the parallel black market to access dollars because of the zero documentation required to conclude transactions.

The rush for dollars at the black market comes following implementation of a new forex purchase law requiring buyers to present Tax Clearance Certificates to banks and other authorized dealers.

With most buyers not possessing the required tax clearance certificates to buy at the official Investors and Exporters (I&E) window, the demand has now moved to the black market, where buyers are only required to have cash or make transfers.


Pascal Oparada avatar

Pascal Oparada (Business editor) Pascal Oparada is a Mass Communications Graduate from Yaba College of Technology with over 10 years of experience in journalism. He has worked in reputable media organizations such as Daily Independent, TheNiche newspaper, and the Nigerian Xpress. He is a 2018 PwC Media Excellence Award winner.

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