Naira drops to record low, hits N700/$1 at black market
The exchange rate between the naira and the US dollar has fallen beyond the N700/$1 threshold at the parallel market on Wednesday, 27th of July 2022, despite starting the day at N675/$1.
This is according to information from Bureau De Change operators in Lagos State.
Similarly, at the cryptocurrency P2P Exchange market, the rate has fallen to N702.8/$1, a 5.4 per cent depreciation compared to N667/$1 recorded in the previous trading session.
Naira has been under immense pressure in the past two weeks, falling from an average of N618 to a dollar recorded two weeks ago.
Meanwhile, in a conversation with a BDC operator at the Lagos International Airport, he stated that he sells dollars for N675/$1, while he buys from customers at the rate of N665/$1, indicating a N10 margin on every dollar.
Exchange rate for “inflows”, a term for dollar transfers from a foreign country into Nigeria or in another account in exchange for naira locally, ranges from between N665-680 from some of the checks we conducted.
While the exchange rate is experiencing huge volatility and disparity at the unofficial markets, the Investors and Exporters window, where forex is traded officially, has also seen some level of a downtrend in recent weeks, albeit controlled.
Some BDC operators have blamed the volatility in the parallel market on the fragmented and disorganized state of the market. Some have also blamed it only for a significant rise in demand as a result of panic buying.
The nation’s external reserve has also resumed downward movement after 27 days of consecutive appreciations. However, in the past one week, the external reserve has lost $138.7 million, after five consecutive days of decline.
The decline in the external reserve could be largely attributed to the intervention by the apex bank in the I&E window.
Nigeria practices a managed floating exchange rate system, which allows the Central Bank to intervene regularly in the foreign exchange market to change the direction of the currency’s float.