Naira exchange rate at the black market depreciates to N685: Investors fear a retest of N700

By: Damian Okonkwo

The Naira exchange rate against the US dollar has remained volatile at the black market in the just concluded week, with the rate jumping to N685 over the weekend and remaining at this level ahead of the new week. This has caused great panic among investors who fear a retest of the previous all-time low above N700 recorded last month.

The Naira exchange rate at the black market had remained very volatile all through the first and second quarters of 2022. The volatility was sustained in the third quarter also. The black market rate fell to N635/$ during the first week of August from the previous high at N750/$ created during the last week of July.

The volatility has showcased more in August, rising to N675/$ on Wednesday 10 August 2022, and next to N685/$ over the weekend.

The strong volatility and instability of the Naira exchange rate at the black market could be attributed to the unstable supply of forex at the exchange window and other economic factors troubling the country at the moment.

Notwithstanding the rapid volatility experienced at the black market, the Naira exchange rate at the Import and Exchange (I&E) Window remained fairly flexible with a lower fluctuation rate witnessed often. The official rate closed on Friday at N419.22 per dollar and remained the same over the weekend.

The black market exchange rate always differs from the CBN rate which has been the official exchange rate between the US dollar and the Nigerian Naira. Hence, the CBN often discouraged investors from using the black market.

Nonetheless, the high rate offered at the black market had often become a new business for many foreign exchange dealers today, especially the politicians who hoard the dollar hoping to sell them at higher rates.