The gap between the official and black market rates has widened to a whopping N271, owing to the huge depreciation of the Naira in the parallel market.
While the Naira has remained reasonably constant at roughly N434/$ at the CBN official window, the black market exchange rate has depreciated significantly by 48.87% within the year to trade at N705/$ at the time of writing.
Consequently, Nigeria’s currency ranks 11th worst-performing currency against the US dollar, according to Hanke’s Currency Watchlist.
What the CBN is saying
Prof. Adenikinju, Adeola Festus a member of the CBN’s Monetary Policy Committee said that he was surprised about the resilience of the official exchange rate.
This was disclosed in the communique of the meeting held on Monday 18th and Tuesday 19th July 2022.
He said “Unexpectedly the Naira appreciated in the I&E windows at a time when currencies across the globe are depreciating against a strong dollar. It is also unexpected at a time the huge demand for dollars in the commercial banks outstripped supply.”
What you should know
- It is worth noting that the official exchange rate reached its lowest point on September 6th, trading at N434/$. This rate, however, is still a long way from the parallel market.
- Consequently, dollars at the official exchange rate is difficult to obtain and rationed, leaving the general population with no choice but to obtain Forex through other means.
- Nairametrics reported on the scarcity of dollars in the official window where thousands of applicants are facing harrowing experiences as they get their PTA in two or three tranches depending on what is available in the banks’ vault.
- The aviation sector in Nigeria has also seen the repercussions of dollar rationing, with $464 million in income belonging to international airlines in Nigeria being delayed from repatriation as of July 2022.
- This development caused Emirates Airlines to announce the suspension of flights to Nigeria from September 1, with several others including British Airways reported to be warming up for the same action.
- In response, the CBN released the sum of $230 million of the intervention fund to tackle FX bottlenecks affecting foreign airlines.