What is the black market exchange rate for a currency pair of Naira and United States Dollar? How is the exchange rate determined? Keep reading to find out more.
What do you know about a black market? The trusted sources describe it as a market also known as underground economy, where people are involved into illegal trading or any other market activities. Black markets control a huge deal of total liquidity of different countries. This means that when a state like Nigeria decides to crack down on speculation of Naira, black market dealers will use the situation to make a fortune out of it by selling the liquidity at much higher rates.
Within the last several years Naira remained staying at the record lows when exchanged for United States Dollar. This was explained by the specialists with the dropdown of the price of oil and other goods the state used for export. The economic conditions changed, and the Naira currency was hit to its lowest rate within the last months.
This time last year Nigerian black market was offering the USD 3-5% cheaper than on Christmas 2014.
Four month ago Naira was still showing a significant fall against United States Dollar on the market. Back then you could get 1 Dollar for N385 (unofficially on a black market).
However, the rates on the interbank were quite stable at the level of N199.3. as the trusted sources back then said this was not a good sign for Naira, as the gap between the black market and official rates increased by N60 in less than a week. Official sources show that on February 12 one could purchase one United States Dollar for N325, while on February 17 this number reached N385.
In order to prevent continuous fall of Naira banks took a number of serious measures. For instance, they said that banks themselves could not store their funds in American dollars, as it was detrimental for Naira itself. Moreover, dollars bought at the interbank market can only be stored for two days and then exchanged into the national currency.
This fall resulted in the huge damage for small businesses, as they hoped to have more revenue before Christmas holidays. Unfortunately, as dollar could not be bought small businesses were the first ones to suffer the pain from it.
Nevertheless, the official rate of buying or selling the United States Dollar on the website of the Central Bank of Nigeria is N281.5 for 1 USD. This means that as of June 27th, one could buy 1 Dollar at N281 and sell at N282.
A popular web resource for foreign currencies exchange online, Jiji.ng, states that right now you can proceed to the trading table and get 1 Dollar for N342. This shows significant progress in the value of Naira.
President Muhammadu Buhari when asked to devaluate Naira last winter, said that he refuses to “kill the Naira”. And the progress we see now on the market proves that he and his advisors were right about giving to Naira a chance.
The authorities have not yet commented on the tendency. Yet, we are sure that they see what an effect their decisions have on the both official and unofficial prices of the currencies. Unfortunately, no predictions can be made on the future tendency.
The problem is that Nigeria is extremely import-dependent; this makes its own currency exposed to changes on the market and its various volatilities.
The only thing left is to hope for a better future for Nigerian Naira and wise decisions made by the government.