FX market defies devaluation of Naira as black market rate rises

June 15, 2023
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The gap between the official window and the black market was reduced on Wednesday to N96.26, from N288.63 the previous day.

It was learnt that despite the devaluation of the naira in the official market, the black market exchange rate of the dollar inched higher by N4.6 kobo or 0.6%.

Recall that the Central Bank of Nigeria (CBN) devalued the naira in the official market with authorised dealers expected to sell the dollar at N664.04/$1 after the close of trading on Wednesday.

The naira was devalued by 40.7 percent, with the price of the dollar rising by N192.37 kobo this night.

In a circular released on Wednesday evening, the apex bank announced the reintroduction of the “Willing Buyer, Willing Seller” model which allows the market to determine the rates at which the foreign currencies would be sold in the official market.

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Similarly, the cost of the pound in the parallel market also increased to N976/£1, which is N11.4 kobo or 1.18% higher than the N964.6/£1 rate the British banknote was sold the day before.

Also, the naira fell to the euro in the black market, as the European currency was offered at N834.4/€1, up from N829/€1.

This indicates that preference for the black market is still high among foreign exchange buyers, as the value of all foreign currencies increased, despite the official market rates entering the level stage.

The average rate of the dollar in the black market was N760.3/$1, against the N664.04/$1 the United States currency was sold at the official market.

Recall that on Tuesday, the naira to the dollar exchange rate in the parallel market was N755.7/$1, according to Naira Rates, a black market price aggregator, while that of the official window was N471.67/$1, based on data from FMDQ Exchange.

With the gap between the official and black markets shrinking to N96.26 kobo, from N288.63 kobo, this indicates the Central Bank of Nigeria (CBN) has devalued the naira and empowered the authorised dealers or buyers and sellers to set the rate of the USD.

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