Dollar to Naira: A further decline in the black market exchange rate

• A further decline in the black market exchange rate
• Trading at the official Nigerian Autonomous Foreign Exchange Rate Fixing(NAFEX)
• Effects of the New Naira Note on Your Money

On Monday, November 7, 2022, the black market saw a slower pace of trading at an average rate of N875/$1, down from an average of N870/$1 seen in the previous trading session. This represents a further decrease in the exchange rate between the naira and the US dollar.

On the other hand, the rate of exchange between the local currency and the US dollar on the cryptocurrency peer-to-peer FX market reduced by 1.42% to trade at a minimum of N861/$1 on Monday morning from N873.44/$1 that it traded at the same time on Friday, November 4, 2022.

The naira closed against the US dollar on Monday, November 7, 2022, at the official CBN exchange rate of N439.76/$1, registering a little increase from N439.05/$1 that it closed at on Friday, November 4, 2022, the previous trading session. In contrast, FX trading at the I&E window fell by 43.63% to $94.07 million on Friday from $166.88 million on Thursday.

After increasing by 0.001% to $37.3658 billion as of November 4, 2022, from $37.3656 billion the day before, Nigeria’s foreign reserve had a rare upward rise.

Trading at the official Nigerian Autonomous Foreign Exchange Rate Fixing

On Monday, November 7, 2022, the official market’s closing exchange rate is N439.76 to $1, an increase of 0.07% from the previous trading day on Friday, November 4, 2022, when it was N439.05 to $1.

On Friday, November 4, 2022, the indicative opening rate was closed at N439.05 to $1.
Additionally, the currency rate moved as low as N431/$1 during intraday trading, with the highest rate during intraday trading reaching N447/$1 before it closed at N439.05/$1.

The total value of FX moved at the Investors and Exporters window on Friday was $94.07 million, a 43.63% decrease from the $166.88 million transacted on Thursday.

What Will Happen to the Naira?

The Central Bank of Nigeria is planning to introduce new naira notes amid the shock and confusion that have followed the naira’s free fall in the foreign exchange market, while other participants in the country’s foreign exchange market continue to look for ways to stop it and defend the economy from the effects of the current global challenges.

Therefore, the Central Bank of Nigeria (CBN) has announced a plan to release new naira notes starting from November 15, this year, as the authorities continue to tackle the twin problem of volatility in the value of the naira and the growing volume of currency outside the banking system.

About 85% of the currency in circulation, according to CBN Governor Godwin Emefiele, is not in the banking system, which some analysts have cited as one of the factors contributing to the current pressure on the naira.

He decried the fact that out of the N3.23 trillion in circulation, more than N2.73 trillion, or 85%, is not in the banking system. As of January 31, 2023, the previous notes will no longer be considered legal tender and will be replaced by new messages in the denominations of N200, N500, and N1000.

Regarding whether or not the new naira notes will have an impact on the economy, financial analysts have different opinions.

Professor of Capital Market Studies and Chairman of the Abuja Chapter of the Chartered Institute of Bankers of Nigeria, Prof. Uche Uwaleke, thought the move will reduce corruption and black money.

“Although the action does not equal the demonetization of large currency notes, which central banks frequently carry out to combat black money and corruption, it would go a long way in guaranteeing that a lot of naira notes circulating outside the banks are crowded in,” he said.

“I anticipate that the Financial Intelligence Unit will be keeping an eye out for large deposits in order to keep an eye on unauthorized activities.

Continue Reading: CBN: Effects of the New Naira Note on Your Money