Exchange Rates Near Convergence as Naira Rallies in Official, Black Markets by Over 20% in One Week

Exchange Rates Near Convergence as Naira Rallies in Official, Black Markets by Over 20% in One Week

  • The naira is recovering against the dollar after three weeks of depreciation
  • The wide margin between the official and parallel markets is closing as the naira recovers by over 20%
  • Analysts believe that the naira is appreciating because of new measures by the federal government

Pascal Oparada has over a decade of experience covering Tech, Energy, Stocks, Investments, and Economy.

After three weeks of freefall in the official and black markets, there seems to be some respite for the Nigerian currency, the naira.

From the beginning of October, the naira witnessed an unprecedented fall against the US dollar, which analysts blamed on the shortage of Forex.

Naira, dollar, Black market
The gap between the official and black market finally closing as the naira appreciates Credit: SOPA Images / Contributor
Source: Getty Images

Nigeria faces challenges of Forex backlog

Nigeria is battling acute Forex challenges, affecting inflation and living standards, and worst of all, the naira.

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The country is estimated to have a $7 billion backlog affecting the local currency.

The scarcity of the naira was most felt on the streets, where speculators had a field day at the detriment of importers and exporters who badly needed Forex for transactions.

The pressure on the few dollar notes available on the streets led to a wide disparity between the official and parallel markets by as much as 40%.

Naira float leads to vast disparity in exchange rates

The wide margin was blamed on the free float of the naira, which the federal government started on June 14, 2023, to unify the exchange rate windows.

Financial expert Iwuchukwu Francis says the volatility was caused by the need for more sound knowledge of the dynamics of the Nigerian Forex markets and not just scarcity.

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“Waking up one day to announce currency float was a bad idea. What should have been best for the naira was devaluation, which I believe the former CBN management under Shonubi wanted to do.”
But the moment the naira float was announced, people began to hoard Forex because they knew it would take a hit,” Francis said.

According to him, what should have worked was for the authorities to begin a crackdown on speculators and rein in currency hoarders.

The Naira gaining strength against the dollar

But three weeks after experiencing the biggest fall in history, the naira rebounded on the parallel and official markets by over 20%.

The local currency, which crashed to its lowest of N1,310 in the parallel market, rebounded to N1,170 per dollar as of Wednesday, November 1, 2023, and traded at N815 per dollar at the official NAFEM on Tuesday, October 31, 2023.

On Wednesday, November 1, 2023, the naira appreciated further, trading at N786.02 at the Official NAFEM.

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“N789/$”: Naira begins new week strong against dollar as experts predict more wins

The naira had initially crashed to almost N1,000 per dollar in the official market on Monday, October 30, 2023, but dramatically recovered the following day.

There is now a disparity of more than N300 between the official and black markets compared to the almost N500 gap between the two markets three weeks ago.

According to reports, Nigeria still needs to exploit favourable opportunities in the global oil boom to boost its local currency.

“We’re Ready:” ABCON sends an essential message to CBN on dorm account regulations reported that President of the Association of Bureaux de Change Operators of Nigeria (ABCON), Aminu Gwadabe, has asked the Central Bank of Nigeria (CBN) to review the laws on domiciliary accounts to stop Forex hoarding.

TheCable reports that the ABCON Chairman stated this on Tuesday, October 31, 2023, as he commented on the recommendations of the Presidential Committee on Fiscal Policy and Tax Reforms.

The Committee, led by renowned tax policy expert Taiwo Oyedele, proposed 20 policy recommendations to improve the Forex market and end volatility in the system.


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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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