Naira depreciates further, exchanges for N750/$ at black market

The naira, on Tuesday, declined further against the dollar at the parallel section of the foreign exchange (FX) market, popularly called the black market.

A parallel market (black market) is an unofficial market for currencies which operates alongside the official market.

Speaking to TheCable, Bureaux De Change operators (BDCs) at Alade Market in Ikeja, Lagos, quoted the naira at N750 to the dollar at the black market.

The figure represents a depreciation of N5 or 0.7 percent from the N745 it traded last week.

The black market traders put the buying price of the dollar at N735 and the selling price at N750, leaving a profit margin of N15.

“I can just say that demand has been moderate this week,” a trader identified as Abdullahi, told TheCable.

Since the suspension of trading information by abokiFX, Nigerians have resorted to street traders for current parallel market rates of the local currency.

Although the parallel segment is more accessible to traders and businesses who need FX, the Central Bank of Nigeria (CBN) has consistently maintained that it represents less than one percent of forex transactions and should never be used to determine the exchange rate.

On the official market side, the local currency closed flat against the dollar at N451.50 on Monday, according to information obtained from the FMDQ OTC Securities Exchange – a platform that oversees official foreign exchange trading in Nigeria.

Last week, Godwin Emefiele, CBN governor, spoke about the persistent shortage of foreign exchange to meet citizens’ needs.

He asked banks to come up with an action plan for boosting FX inflow from non-oil exports.

“We are in the business of servicing customers, and servicing customers also entails that they have import needs and they need foreign exchange to conduct their import activities,” Emefiele had said.

“To do so means that you need foreign exchange to service them. There is a clear shortage of foreign exchange today. But yet as bankers, we must meet the needs of our customers.

“The market is tight, and I know we don’t have a choice. We will have to do something to ensure that this problem is solved.”