Breaking: Exchange rate hits N485 at black market

The exchange rate between the naira and dollar was offered for as high as N485/$1 as dollar scarcity hit the parallel market. A cross-section of traders contacted by Nairametrics explained that forex has been scarce which is now resulting in price volatility.

Nigerians are currently enjoying a two day Sallah Holiday.

Volatile Market: While some traders sell for N475/$1, others sell for as high as N490/$1. Wired transfers trade is as high as N490/$1, according to our findings.

READ ALSO: There are now 18,000 Bitcoin millionaires

Earlier today, the Nairametrics exchange rate tracker quoted the average price at N480/$1 down from N485/$1 quoted a day earlier. The exchange rate at AbokiFX a site that tracks exchange rate prices quotes the parallel market rate at N475/$1 if you wish to buy.

It is also understood that some of the chances of getting the forex are actually slim despite the price volatility. Wild price swings are often symptomatic of forex scarcity. Price disparity within the black market often occurs when there is scarcity

Weak turnover at NAFEX: On Wednesday, the last trading day before the two day Sallah holiday, Nigeria’s exchange rate at the NAFEX window appreciated to N389.25 during intraday trading on Wednesday, July 29th, 2020. This represents a 25 kobo gain when compared to the N389.50 rate close that was reported on Tuesday, July 28.  The opening indicative rate was N388.61 to a dollar on Wednesday representing a 17 kobo drop when compared to the N388.44 to a dollar that was recorded on Tuesday.

READ MORE: Naira remains stable at the forex market as NAFEX market turnover drop by 59% 

Also, forex turnover at the Investor and Exporters (I&E) window recorded a decline on Wednesday, July 29, 2020, as it dropped by 52.1% day on day. According to the data tracked by Nairametrics from FMDQ, forex turnover decreased from $39.31 million on Tuesday, July 28, 2020, to a low $18.83 million on Wednesday, July 29, 2020.

FX supply at the official I&E window has fallen in recent weeks dropping to as low as $27 million compared to $47 million the week before. A total of $97 million was sold at the I&E window this week compared to $136.9 million the week before. However, the FMDQ is closed, Thursday and Friday.

Why this matters: The wider the disparity between the official rates and the black market, the more pressure the CBN is to unify the official exchange rate windows and improve suppliers. We believe a significant turning point will arise once the parallel market exchange rate hits the N500 marker.