Naira exchange rate ends the year at $735/$1 at the black market

By: Damian Okonkwo

The Nigerian Naira ended the year at a lower value at the black market exchanging at N735/$1 on 31st December 2022. This is contrary to the official rate at the Investors and Exchange Window (I&E) where it closed at N461.5/$.

The present closing rates marks an over 23% decline at the black market rate YoY compared to the closing rate of N561/$1 witnessed on 31st December 2021.

Also, the official rate declined by 5.6% YoY compared to the N422.67/$1 recorded as of 31st December 2021.

One ugly scenario that played out this year when it comes to the Naira exchange rate against the US dollar, is the high disparity between the black market rate and the official rate. Thus, the latter is bigger than the official rate by an additional N273.5 which is almost 50% of the official rate.

The dollar scarcity found among the commercial banks in the country has given the black market dealers greater audacity to increase their rate at such a high jump because a high number of forex dealers now prefer to exchange with them.

Notwithstanding, investors are currently forecasting that the naira will likely have more value on the black market within Q1 of 2023 due to the imminent presidential election coming up in February 2023. The uncertainty surrounding the outcome of the election and the high demand for foreign products used during the campaigns will likely cause more devaluation for Naira during this period.