Nigerian Naira Reaches New Low Amid Surging Black-Market Dollar Demand
The Nigerian naira saw further decline in its value in unofficial trading circles due to an intensifying dollar shortage in the country. This comes just two months after the central bank introduced a more flexible exchange rate in hopes of boosting inflows.
The naira, representing Africa’s largest crude oil-producing nation, decreased to 923 naira per dollar, a slight dip from 917 naira the previous day. This data was provided by Umar Salisu, an expert in the nation’s currency market. The increasing scarcity of dollars in banks has led many to seek the black market, resulting in a growing disparity between the official exchange rate and the street rate.
In a move to streamline its exchange rate policy and rejuvenate dollar transactions, Nigeria’s central bank relaxed foreign exchange controls in mid-June. This led to a 40% drop in the official rate, temporarily aligning it with the black-market rate. However, due to persistent imbalances in dollar supply and demand, this gap is expanding once again. For instance, the official rate was 782.38 naira per dollar last Thursday, as reported by the Lagos-based FMDQ OTC Securities Exchange.
Salisu mentioned in a phone interview that many businesses are sourcing dollars from the street market to import products for the upcoming festive season. Moreover, individuals are buying dollars for overseas trips. “The demand is increasing because people aren’t obtaining dollars from the banks, causing strain on the street market,” Salisu added.
The current dollar scarcity can be traced back to previous governmental controls on currency, which were designed to manage dollar demand. With these controls now removed, the market is grappling with a significant backlog of pent-up requests