Naira Plummets to N1,040/$1 at Parallel Market as Forex Scarcity Bites Harder
The naira has continued to lose value against the dollar at the parallel market, where forex is traded unofficially. The exchange rate fell to N1,040/$1 on Monday, as demand for the greenback far exceeded supply.
According to forex traders who spoke to Daily24Apps, the quotes for inflow ranged between N1,035 and N1,045 to the dollar, indicating a severe scarcity of forex in the market. They also said that the official exchange rate of N776.8/$1 was not reflective of the reality on the ground.
The parallel market exchange rate broke the N1,000/$1 barrier in September, and has been on a downward spiral ever since. The lack of forex inflows from the government and other sources has worsened the situation, as customers scramble for the scarce dollars.
Other platforms where forex is traded also showed a similar trend. On the peer-to-peer market, where forex is exchanged via cryptocurrency, the rate was around N1,040/$1. On foreign investment trading platforms like Bamboo and Trove, the rate was about N1,022/$1 and N1,017/$1 respectively.
The exchange rate disparity between the official and parallel market rates has widened to about 26% or N265/$1. This means that Nigerians who need forex for various purposes have to pay more than a quarter of the official rate to get it.
A source who buys forex regularly told Nairametrics that the situation was now worse because even the official window was not accessible. “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,” he said.
Daily24Apps also learned that banks have close to $20 billion in foreign currency swaps held by the Central Bank of Nigeria (CBN). This is in addition to the $8 billion that is estimated to be trapped as outstanding funds. These funds could potentially ease the forex scarcity if they are released into the market.
