Naira to Dollar Trades at 4 Different Exchange Rates, CBN Steps In To Correct Distortion

• The Nigerian currency is being exchanged against the US dollar at different rates in the global foreign exchange markets
• This occurs despite efforts by the CBN to provide stability by selling dollars to the Bureau de Change operators
• The CBN recognises the Nigerian Autonomous Foreign Exchange Market (NAFEM) window as the official market and the black market as the unofficial market

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

Naira in the foreign exchange market is trading at four different exchange rates against the US dollar on Monday, April 29, 2024.

Legit.ng checks also showed a wide disparity between the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, known as the official market, and different unofficial markets.

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Different exchange rate for naira

At the official market, the naira's closing rate on Friday, April 26th, depreciated to N1,339.23/$1.

On the street, also known as the black market or parallel market, traders informed Legit.ng on the afternoon of Monday, April 29th, that one dollar was being sold at N1,356.

Licensed BDC operators, who were allocated $10,000 by the Central Bank of Nigeria(CBN) at the rate of N1,021/$1, cannot sell above the maximum exchange rate of N1,040.

For Nigerians looking to buy or sell dollars using Fintech apps such as Chipper Cash, checks show that a dollar was priced at N1,510 at the time of writing this report, while the conversion of a dollar to naira from the apps is set at N1,283/$.

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CBN seeks solution

The CBN participated in the foreign exchange markets in an effort to halt the depreciation of the naira.

In addition to giving dollars to BDCs, BusinessDay reports that the apex bank requested a two-way quote (the price at which it was willing to buy and sell forex).

According to BusinessDay, some banks quoted rates as low as N1,100/$ and N1,150/$, deviating from the market rate of $1,400. A banker mentioned that this seemed to be an off-market quote.

The CBN in response, offered to buy at that rate from the bank, prompting the banks to reconsider and revert to proper professional behaviour.

UK firms predict exciting exchange rate

Earlier, Legit.ng reported that two UK-based financial institutions have predicted a new exchange rate for the naira against the dollar.

Goldman Sachs and Standard Chartered believe the naira will rebound and close stronger in 2024.

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Their predictions are based on the current reforms by the Cardoso-led CBN, which has helped the naira achieve an N1572.86/$ rate on Monday from above N1,600.

Source: Legit.ng