The exchange rate between the naira and the dollar fell to N1,040 at the parallel market as demand continues to outpace supply on a frequent basis.
Forex traders who spoke to Nairametrics indicate quotes for inflow range between N1035-N1045 to the dollar suggesting this was due to increased scarcity.
Meanwhile, the official exchange rate continues to trade at N776.8/$1 highlighting the disconnect between what Nigerians are experiencing outside of official channels.
Parallel Market: The exchange rate on the parallel market where forex is sold unofficially broke the N1000/$1 benchmark in September in what some analysts thought was temporary.
- However, the failure of the government to attract forex inflows has kept the exchange rate spiraling out of control closing weaker every week.
- On the peer-to-peer market where the exchange rate is sold via cryptocurrency, buyers and sellers quoted around N1040/$1.
- On foreign investment trading platforms like Bamboo and Trove, the exchange rate was quoted at about N1022/$1 and N1017/$1 respectively.
Exchange rate disparity widens: Meanwhile the exchange rate disparity between the official and parallel market rates is now around 26% or N265/$1.
- This compares to around N290/$1 or 38.6% before the unification but at the current official rates, the exchange rate will have to depreciate to N1,200/$1 to achieve the disparity of 38.6%.
- However, the pace at which the disparity is widening suggests this scenario is plausible as rising demand amidst limited supply continues to depreciate the currency.
A heavy buyer of forex who spoke to Nairametrics on the condition of anonymity, opines the situation is now worse because nobody seems to be able to purchase forex even at the official window.
- “There is no dollar at the i&E window and no bank is selling. Banks now tell you to fund your account as they no longer issue letters of credit. So it’s all black market for now”
Meanwhile, Nairametrics understands banks have close to $20 billion in foreign currency swaps held by the central bank. This is in addition to the $8 billion thought to be outstanding as trapped funds.
