According to media reports, the exchange rate between the naira and the dollar fell to N800/$1 on Monday even as some outlets reported the exchange rate at N865/$1.
Nairametrics cannot verify any of these rates however, sources at several bureaus de changes we spoke to suggest that rates range between N790-N800/$1.
Since the apex bank made this announcement last week, the naira has fallen from its initial record low of N765/$1, losing over N30 in three days, piling more pressure on an already depreciating currency. Meanwhile, the official rate according to the central bank preferred NAFEX market is N443/$1 representing a N352 rate disparity between the official and black market rates.
Our sources also opine that the disparate exchange rate frenzy in the market is caused by naira hoarders who are moving quickly to convert their naira stashed outside banks to dollars ahead of the deadline date. The local Nigerian currency is currently under high selling pressure in the black market following CBN’s announcement that the newly redesigned naira notes would start circulating in the economy from December 15, 2022.
Rate disparity – But as rates continue to be brandished across media platforms, actual trades are consummated at disparate rates.
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- A trader who spoke to Nairametrics earlier on Monday confirmed they sold forex at about N785/$1 for “inflow” a term forex transfer other than cash.
- The source also opined that cash-based trades sold at a higher premium to accommodate increased demand from hoarders.
- Another trader who spoke to Nairametrics claimed rates were even as high as N890/$1 for inflows and N807/$1 for cash transfers. However, they cautioned these were mere speculative buttressing the buy and sell frenzy in the market.
- Rates across several parts of the country also differed in prices for cash and inflow deepening the fragmentation in the black market where forex is traded unofficially.
Some traders also complained that supply was hard to come by as most banks did not have enough to sell while those who had held on to their stash in anticipation of further depreciation. The dollar scarcity point to an even further depreciation of the exchange rate.
Who is buying? Nairametrics findings from traders suggest the buyers are diverse despite the activities of those looking to convert their naira stash into dollars.
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- Buyers include Nigerians leaving the country for Canada, and other western nations, students schooling abroad, importers, speculators, and companies looking to repatriate forex.
- While there are diverse buyers, sellers are few and far between dominated mostly by exporters and some Nigerians in diaspora.
Pressure on hoarders remains high as most Nigerians are exposed to the central bank deadline date to deposit their cash hoard approaches.
- Reports indicate most black market operators are wary about collecting cash in exchange for dollars for fear of being queried by banks and the EFCC.
- Nairametrics opines most of the illegally obtained naira stashed in people’s homes risk being caught up with the central bank’s January 31 2023 deadline.
- The new currencies will begin circulation on the 15th of December 2022.
This article was updated to reflect new information.