But analysts say these gains may not hold up for long, and we might even begin to see a reverse any time from now.

To understand why it is important to understand how the parallel market works and how the exchange rate is determined in the black market.

The black market rate in Nigeria is determined by market sentiment of supply and demand, if plenty of people are demanding the dollar, the price goes up and vice versa. The market in recent days has seen a surge in dollar supply is the reason why the exchange rate is falling now, here’s how.

Reasons for the crash

EFCC raid on BDCs

Throughout last week, EFCC officials raided the offices of bureau de change merchants in Abuja, Lagos, Kano and other major cities over allegations of currency hoarding and helping politically exposed persons to exchange their naira for dollars before the January 31, 2023 deadline when the CBN said old naira banknotes will cease to become legal tender in the country.

These raids forced most of the BDC operators to go underground, this move forced politically exposed persons to hold back their demands for the greenback. The huge demand that pushed up the exchange rate disappeared almost instantly.

Expiring dollar bill rumour

Following the announcement that the CBN has concluded plans to phase out the country’s 200, 500 and 1000 naira banknotes by January 31, 2023. Some people began peddling the rumour that the US Federal Reserve is planning a similar move with the dollar.

These unfounded rumours caused panic in the market with people who have the greenback selling before any possible expiration date. Though the rumour was false, it caused the market to be flooded with dollars in a very short period

Crash in the crypto market

Earlier this week, Binance, the world’s largest cryptocurrency exchange, backed out of its decision to purchase faltering cryptocurrency exchange FTX.COM.

Binance said the decision to pull out of the deal was as a result of corporate due diligence and information that regulators were investigating issues of mishandling of investor funds.

This news led to a bloodbath in the crypto market. Bitcoin prices fell 15% to $15.7k on Wednesday as investors liquidated millions of tokens in investments. A total of $200 billion was reportedly wiped off crypto markets within the week.

Nigerians are among the largest crypto holders in the world, and the rush to liquidate tokens meant millions of dollars came into the country as holders try to cut their losses.

BRICS attempt to replace the dollar

The US dollar is the world’s reserve currency, and about 65% of global trade is performed in dollars. But countries in the BRICS organization comprising Brazil, Russia, India, China and South Africa announced that they plan to develop a new currency that will replace the dollar in global trade.

This news is also affecting the confidence that people have in the US dollar remaining the world’s reserve currency in the long term.

Bottomline

A combination of factors both local and international have helped the naira make some gains against the dollar in the black market. But these gains might not hold for long as the underlying factors that weakens the naira are still there.

The fact that Nigeria imports almost everything and doesn’t export anything valuable. Nigerians still spend over $ 1 billion on medical tourism every year. Thousands of Nigerians still leave the country every year due to rampant insecurity and to seek greener pastures abroad. Unless these factors are addressed, the naira to dollar exchange rate might sink to #1000/$ soon.

The post Why Naira to Dollar Exchange Rate is Crashing at the Black Market appeared first on AFRICA EXPLAINED.

These buying and selling rates are just a rough estimate that can vary depending on your bureau de change merchant and your negotiating skills.

At the maximum, you shouldn’t be selling or buying at more than +/- 10 naira from the prices stated above.

Over at the official CBN regulated market, the naira is trading at ₦417.30/$1. 

What does the official CBN exchange rate mean?

Sometimes last year, the CBN accuses bureau de change operators in the country of artificially devaluing the naira in other to make profits. It subsequently banned their activities and in one episode, declared foreign exchange platform, AbokiFX an enemy of the state.

The CBN then started to publish the “true” value of the naira on its website.

The CBN rate is the rate at which banks sell PTA and BTA to travelers. It is the rate at which importers and exporters officially do business in the country.

The black market on the other hand are operators who exchange currencies for people usually at a much higher rate than the CBN’s. The CBN has long maintained that the black market account for a small portion of the country’s foreign exchange market.

Why do Nigerians buy currency at the black market?

Despite that fact that the CBN has declared the activities of bureau de change operators as illegal, the black market is still a thriving platform.

For starters, the CBN has capped PTA and BTA allowances at $5,000 and $10,000 respectively. travelers who require more have to rely on the black market to fill in the balance.

Both PTA and BTA is only available to Nigerian citizens, foreign expatriates who live in Nigeria have to source their forex from the black market when traveling.

For bloggers, freelancers and other Nigerians who earn in foreign currency, it is much advantageous for them to exchange their currency at the black market. They get #580/$ at the black market compared to the #418/$ they would get at the official CBN market.

How to find black market bureau de change operators in Nigeria

Like everything that involves financial transactions, one needs to be very careful when dealing especially with Nigerians. Bureau de change operators can be found at the commercial district of every major city in Nigeria. They can also be found at airports and some major hotels in cities. These operators are usually of Hausa ethnicity, hence the name Aboki.

As a safety precaution, make sure to always deal with operators that have a fixed address in a public shop, that way you can always find them in case something goes wrong.

If you are in Ilorin, black market bureau de change operators can be found inside Kwara Hotel complex along Ahmadu Bello Way, just before government house. The operators located there are tested and you can always trust them to give you a fair price.

The post Dollar To Naira Black Market Exchange Rate Today May 5, 2022 appeared first on AFRICA EXPLAINED.

Dollar to Naira exchange rate at the black market today, Monday 7 February is ₦560/$1 buying rate and N565/$1 selling rate according to bureau de change operators in Lagos and Abuja. The ₦560/$1 rate has remained fairly consistent since before Christmas and has maintained the same price so far throughout 2022.

Earlier in January, the Central Bank of Nigeria CBN took a step towards devaluing the naira when it adopted the official Investors and Exporters (I&E) window rate – the naira jumped from N411.73/$1 which it has been for months to N427/$1 at the official CBN controlled market.

The CBN accused bureau de change operators of arbitrarily fixing the exchange rate of the Naira to their personal advantage, but months since the apex bank stopped selling forex to them, the naira is still yet to make much significant gains.

What does the official rate mean?

The official rate is the exchange rate approved by the CBN – the Central Bank of Nigeria is the sole regulator of Naira and determines the exchange rate. About 6 months ago, the CBN banned the activities of Bureau DE Change operators and ordered banks to take over the buying and selling of foreign currencies in the country. The CBN is selling FX directly to the banks so they can in turn sell to end users in an attempt to control the price of Forex. The price at which the CBN is selling is called the official rate.

To get the official rate, which is much lower than the parallel market rate, you have to go through the licensed commercial banks in the country. It makes sense to buy at the official rate, but if you are selling you might want to consider the parallel market.

Why do people buy currency at the black market?

People buy currency at the black market because getting currency at the official rate from commercial banks is extremely difficult. The banks also have a limit of $5000 as personal allowance for travellers and $10000 as business travel allowance. Untop of that plenty of paperwork is required and most times some banks simply claim they don’t have foreign currency.

That is if you’re buying, if you’re selling the banks buy your Dollar at #427/1$ while the black market buy same at #560/1$. Selling dollar at the black market for those who earn in Dollars such as bloggers, YouTubers and other freelancers makes more sense as they get a high price.

How to find black market bureau de change operators in Nigeria

Like everything that involves financial transactions, one needs to be very careful when dealing especially with Nigerians. Bureau de change operators can be found at the commercial district of every major city in Nigeria. They can also be found at airports and some major hotels in cities. These operators are usually of Hausa ethnicity, hence the name Aboki.

As a safety precaution, make sure to always deal with operators that have a fixed address in a public shop, that way you can always find them in case something goes wrong.

If you are in Ilorin, black market bureau de change operators can be found inside Kwara Hotel complex along Ahmadu Bello Way, just before government house. The operators located there are tested and you can always trust them to give you a fair price.

The post Dollar To Naira Black Market Exchange Rate Today February 7 appeared first on AFRICA EXPLAINED.

The country’s foreign reserves also suffered a decline of 0.09% on Thursday, 2nd December to close at $41.12 billion compared to $41.15 billion recorded as of the previous day. The recent decline in the nation’s external reserve is attributed to the intervention by the apex bank in the official Forex market, according to Nairametrics. 

How Much Is Dollar To Naira Exchange Rate Today Official Rate?

The official rate today, Monday December 6, for $1 dollar to naira N414.73/$1 at the official Investors and Exporters (I&E) window.

Follow the CBN live stream to see how the Naira is performing in real time.

What does the official rate mean?

The official rate is the exchange rate approved by the CBN – the Central Bank of Nigeria is the sole regulator of Naira and determines the exchange rate. About 4 months ago, the CBN banned the activities of Bureau DE Change operators and ordered banks to take over the buying and selling of foreign currencies in the country. The CBN is selling FX directly to the banks so they can in turn sell to end users in an attempt to control the price of Forex. The price at which the CBN is selling is called the official rate.

To get the official rate, which is much lower than the parallel market rate, you have to go through the licensed commercial banks in the country. It makes sense to buy at the official rate, but if you are selling you might want to consider the parallel market.

If you want to sell dollar today, see the difference between the official rate and black market here.

The post Dollar To Naira Black Market Exchange Rate Today December 6 appeared first on AFRICA EXPLAINED.