Black market traders explain why naira crashed to the lowest

• The Nigerian currency, the naira, depreciated to its lowest in history in the black market on Wednesday, October 16, 2024
• Black market traders quoted the closing rate of dollar at N1,700 per dollar after trading at N1,703 for most of the day
• Also, the naira crashed in the official window, trading at N1,659.69 per dollar as against the N1,658.79 the previous day

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

On Wednesday, October 16, 2024, the Nigerian currency, the naira, experienced another round of unprecedented depreciation in the parallel market, popularly called the black market.

Data from Nairarates, a parallel market trading platform, shows that market dealers quoted the US dollar in the black market at a high of N1,703 and a low of N1,690 before closing at N1,700 on Wednesday, October 15, 2024.

The naira experiences the worst depreciation in the parallel market Credit: Bloomberg/Contributor
Source: Getty Images

Black market traders lament dollar scarcity

Abbas Yishau, a black market trader, disclosed that the dealers were hit with high dollar scarcity, leading to the high rates the US Greenback sold in the unofficial FX market

He disclosed that so many buyers are chasing the few available dollars in the black market, which is responsible for the high rates at which the dollar is sold.

“Right now, there is dollar scarcity in the black market. We do not get enough supplies from the Central Bank of Nigeria (CBN) as they prioritise the banks more than us.

They (CBN) might sell the dollar soon because they have asked traders to submit purchase paperwork. I believe that would strengthen the naira,” he said.

Naira crashes in the official window

Meanwhile, the naira lost about 96 in the official window on Wednesday, October 15, 2024, trading at N1,659.69 per dollar, down from N1,658.79 the previous day.

Currency dealers quoted the dollar at a high of N1,682 per dollar and a low of N1,562 in the official window.

Data from FMDQ Exchange shows that the foreign exchange market experienced a decline in market turnover at $177.10 million compared to the $217.86 million recorded the previous day.

There is a clear margin of N96 between the official and black market rates in Nigeria. 

CBN explains sources of FX inflows

The development comes as information from CBN disclosed that foreign exchange inflows via International Money Transfer Operators (IMTOs) rose by 47% to $2.33 billion in the first six months of this year relative to the $1.58 billion recorded in 2023. 

The development comes amid CBN policies allowing eligible IMTOs to access naira liquidity at the official forex window. 

Recently, the apex bank released some measures to boost the FX markets and increase remittance inflows via formal channels. 

Naira reverses gain, crashes by over N100

Legit.ng earlier reported that the Nigerian currency, the naira, has reversed its gain recorded on the official Nigerian Autonomous Foreign Exchange Market (NAFEM).

New data from the FMDQ Securities Exchange showed that the naira depreciated to N1,658.97/$1 at the close of trading on Tuesday, October 15, 2024.

Tuesday's exchange rate is N106.05 or 6.8% depreciation in 24 hours compared to Monday's closing exchange rate of N1,552.92/$1.

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Source: Legit.ng