Gap between official, parallel market exchange rates widens

The naira’s exchange rate in the black market has been drifting far away from the official market level despite the apex bank’s effort to clear outstanding foreign-currency amounts owed in forward deals.

The disparity between the official and black market exchange rates has continued to widen, hitting N388.45 despite substantial clearance of Foreign exchange backlogs by the Central Bank of Nigeria (CBN).

On the Peer-to-Peer market, an unofficial market actively traded by crypto traders, retail investors, and speculators, the naira traded at about N1230/$ in the early hours of Tuesday from Monday’s rate of N1220/$. In addition, the exchange rate for a dollar to naira on the physical black market buy averaged at about N1,245 against the greenback on Tuesday.

The CBN recently stated that it paid about $2 billion in outstanding foreign exchange forwards in the last three months to clear a backlog of dollars, but currency traders at the unofficial market are currently unreactive to such development.

In the official market, the naira strengthened against the US dollar from N869.13 to N856.57 per dollar at the close of business on Friday, according to data from FMDQ. Comparing the local currency to the N869.13 per dollar it closed on Friday, this indicates a 1.45 per cent rise in the country’s traditional market

Currency speculators maintain their grip on the haven currency on the global stage as investors continued to digest last week’s mixed U.S. economic data and looked ahead to key inflation readings for fresh clues on when the Federal Reserve is likely to begin cutting interest rates.