Official, Black Market Rates Gap Widens as Traders Adopt New Naira to Dollar Exchange Rate
- The naira gained 9.68% at the close of business on Monday, May 27 higher than its level of N1,482.81/$ on Friday, May 24
- According to official data, the daily turnover decreased by 67.50% to $180.80 million recently from $556.25 million
- In the black market, however, the value of the naira decreased by 1.32% to N1,520 on Monday, May 27
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
At the close of business on Monday, May 27, the naira strengthened to N1,339.33/$, up by 9.68% from Friday's rate of N1,482.81/$.
Source: Getty Images
The Nigerian Autonomous Foreign Exchange Market's data provider, FMDQ, reports that the daily turnover decreased by 67.50% to $180.80 million on Friday from $556.25 million.
On Monday, the naira's official market saw intraday highs of N1,501 and lows of N1,310 to the dollar.
The value of the naira decreased by 1.32% to N1,520 on the black market from N1,500 on Friday.
Naira's seasonal fluctuation
After declining for weeks, the local currency closed flat against the dollar on Friday, ending the week slightly stronger at the official foreign exchange market.
The governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, referred to this as seasonal fluctuation.
He made this statement at a news conference in Abuja on Tuesday following the meeting of the monetary policy committee.
Cardoso said:
“Members further observed the recent volatility in the foreign exchange market, attributing this to seasonal demand, a reflection of the interplay between demand and supply freely functioning market system.”
According to the most recent data from the CBN, the demand for foreign exchange by people and businesses looking to engage in importation and other forex-related activities decreased by 42% on an annual basis.
Punch reported that Nineteen sectors and services got $21.12 billion in foreign exchange allocation in 2023, according to an analysis of the entire sectoral use of foreign exchange.
However, compared to the $29.98 billion paid to industry participants in 2022, the amount represented a 41.9% decrease, or $8.87 billion, in the CBN's quarterly statistics report.
CBN issues new directives on street trading
Legit.ng previously reported that the CBN banned street trading of foreign currencies by Bureau de Change (BDC) operators, citing the need to regulate the foreign exchange market properly.
CBN's director of risk management, Blaise Ijebor, said street trading of foreign currencies is not allowed as the apex bank does not want BDCs under trees.
He said the traders should be in offices where customers can come in and change their currencies.
Proofreading by James Ojo Adakole, journalist and copy editor at Legit.ng.
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Source: Legit.ng
