- After making a huge recovery last week, the black market returned to selling Naira over N700 on Monday morning
- This comes as a huge surprise to many Nigerians who approached the black market to buy
- Experts have reacted to the current state of the market while speaking on the impact on Nigerians and companies
The Nigerian currency kicked off the new week on a low after closing impressively last week.
According to Naira rates, Black market traders on Monday, November 14, dropped the value of the Naira against the US dollar to N793/$ compared to the N680/$ it traded on Friday last week.
The exchange rate between Naira and the dollar above N700 was confirmed by Legit.ng after several calls to BDCs operators operating in Lagos.
The massive drop in just a few days has left many Nigerians surprised and wondering what is next.
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You will recall that Legit.ng detailed the reasons for the Naira's appreciation from November 10 to November 12, 2022, and why it may be difficult to sustain.
Several experts also expressed a similar viewpoint while pointing out the problems that exchange rate uncertainty will bring.
Experts' opinion of the Naira exchange rate to dollar
One of the experts is the Director General of the Centre for Development of Small and Medium Scale Enterprises, Muda Yusuf, who said Naira’s annihilation and its sudden rise is creating serious anxiety and dislocation in the manufacturing sector.
The former Director General of the Lagos Chamber of Commerce and Industry (LCCI) also stated that the current black market has worsened the problem of uncertainty in the manufacturing sector.
He revealed that Nigerians are no longer exactly sure where things are going.
“We are still watching because we’re dealing with a volatile situation. No one can tell how this situation will last. It is still a volatile market.
“But, I think it is rather readjusting back to the level where the exchange rate was before the CBN announcement which triggered the sharp rise in the dollar against the Naira. The most important thing is that the initial reaction to the CBN announcement is beginning to settle.”
On how the situation impacted the manufacturing sector, Yusuf disclosed that manufacturers had adjusted the prices of their products on the shelf upwards before the dollar-naira exchange started to normalise back to what it was before the CBN announcement.
Also, Managing Director of Financial Derivatives Company Limited, Bismarck Rewane, said the naira is falling on the back of heightened forex demand compared to limited forex supply.
“Nigerian consumers, businesses, and individuals alike are facing challenges and headwinds and are reeling in an atmosphere of hopelessness. This is because of a myriad of factors.
“Notably, the precipitous fall of the naira in the forex market, the power supply shortage, and now the almost unaffordable diesel price.
“In spite of the hike in interest rates, we are witnessing what some analysts fear may become a bout of runaway inflation. Inflation is not just domestic but global.”
For Tajudeen Olayinka, an investment analyst, the rebound of the Naira can only be sustained if the rise happened naturally by adjustment of the imbalances on both sides of demand and supply.
“If this rise we have witnessed is an outcome of the forces of demand and supply. But we don’t have that information yet. Therefore, it will be too premature to conclude that the appreciation in Naira value is a natural occurrence."
Nigeria's foreign reserves drop to the lowest level in 2022
Meanwhile, the Central bank of Nigeria has revealed that Nigeria's foreign reserve is presently at its lowest level in 2022.
CBN has been pulling from the foreign reserve to meet the economy's foreign exchange demands and to safeguard the Naira's value.
Legit.ng analysis also revealed that the CBN withdrew from foreign reserves over $1.8 billion to fight currency depreciation.