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.

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 Forex directly to the banks so they can in turn sell to end users in an attempt to control the price of Forex – having earlier accused the BDC operators of greed and causing the artificial rise of the naira. 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.

The black market or the parallel market on the other hand are BDC operators who used to operate legally before now but the CBN has since withdrawn all there licences. They can be found in shops at every major Nigerian city, they exchange Forex for customers without asking much questions and dont require any paperwork unlike when customers are trading at the official market.

The major difference between the official market and the parallel market in terms of exchange rate is the price and level of paperwork involved. The official market trades dollar for naira around N409/$1 – N415/$1 with much paperwork, the parallel market trades same at around N550/$1 – N560/$1.

Why does the parallel market exists?

you must have noticed there is a premium charge at the parallel market which does not exist at the official market – making exchange rate there much more expensive. The reason why the parallel market exists is the lack of much regulation there. The CBN puts a limit to the amount of Forex each individual can access through the official channels, those willing to pay the surcharge can get as much Forex as they want from the parallel market.

Another reason is that the parallel market offers higher prices for those selling Forex. If you are a blogger or freelancer who earns in dollars it makes more sense for you to sell your money there as you would get a higher price. you get N560/$1 as against the N410/$1 you would typically get at the official window.

Where to sell dollars at black market in Nigeria

You can find Bureau DE Change operators at the business district of every major Nigerian city. If you live in Ilorin, they are located inside Kwara Hotel along Ahmadu Bello Way.

You can simply Google the name of your city with the keyword ‘Bureau De Change’.

The post Naira to Dollar Exchange Rate: difference between official rate and black market rate appeared first on AFRICA EXPLAINED.

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

The official rate today, Tuesday November 23, for $1 dollar to naira = ₦413.79/$1.

According to the data at the FMDQ Security Exchange where forex is traded officially, exchange rate between the naira and the US dollar opened at ₦413.79/$1 on Tuesday 23, after it closed at ₦415.07 to a $1 on Monday, 22 November 2021.

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 Bureu 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 FX. 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.

How much is exchange rate of Dollar to Naira in Black Market today?

The exchange rate for a dollar to naira at Lagos Parallel Market (Black Market) for today, Tuesday, November 23 sells at N555/1$, according to sources at Bureau De Change (BDC). The Black market is also referred to as the illegal market as the CBN does not recognize nor regulate their operations.

If you are selling dollar as a blogger or a freelancer who earns in foreign currency, it makes sense for you to sell at the black market as you would get a higher price. You sell at N555/1$ as at against N414/1$ you will get at the official market from your bank.

Trading at the official NAFEX window

The exchange rate between the naira and the US dollar opened at ₦413.79/$1 on 23rd November 2021 after closing at ₦415.07/$1. Showing a change of 0.06.

According to data from FMDQ, forex turnover stands at $149.53 million.

Meanwhile, the Central Bank of Nigeria (CBN) has revealed that those who violate its Bank Verification Number (BVN) policy will be barred from accessing credit and also from opening new accounts.

The CBN made the announcement in a Revised Regulatory Framework for Bank Verification Number (BVN) operations and Watch-List for the banking industry.

Mr. Musa Jimoh, Director, Payment System Management Department of the CBN signed the framework which was consequently released in its Update Report Circular.

The CBN also maintained that the new framework has been designed with the effectiveness of customer due diligence and Know Your Customer in mind.

The general public was informed that breaches on the part of customers could see the individual getting barred from entering a new relationship with any bank.

The post Dollar To Naira Exchange Rate Today 23 November 2021 appeared first on AFRICA EXPLAINED.