Ojimaojo Yunus
The naira has taken further plunge against US dollar as exchange rate becomes N900/US$1, according to a cross-section of dealers who claimed to have traded on Saturday 5th November, 2022.
This is more than double the official NAFEX exchange rate of N440/$1 reported by the central bank on its website for November 4, 2022.
The rates closed above N870/$1 on Friday, however, several parallel market rates seen by THE EXPLAINER suggest rates depreciated further to as low as N890-N900/$1 if you want to buy from traders.
The British Pound also sold for about N1005/£1 according to a tracker seen by Nairametrics while the Euro sold for about N865-N870/$1.
However, a quick check at peer-to-peer exchanges where dollars are also traded using the cryptocurrency USDT, reveals rates averaged N830/$1 as of Saturday evening while rates ranged between N829-N833.9?$1.
Unlike the inflow market where trades can be in millions, the value of trade in this market is typically small with an average trade of about $1,500 per transaction.
A reliable source who buys inflow dollars regularly informed us they bought at above N900/$1 on Saturday. Inflow dollars refer to non-cash-based forex transactions consummated between two bank accounts.
Inflow dollars are typically more expensive than cash-based transactions due to the ease of movement of the funds.
The Nigerian banking system restricts transfers and withdrawals of dollars deposited via cash.
Context: An exchange rate of N900/$1 is a psychological ceiling that most analysts never thought will be breached this soon.
The exchange rate depreciated to N800/$1 on the 1st of November, meaning it has taken just 5 days to fall by N100 to N900/$1.
Should it continue to depreciate at the pace seen last week at the black market, then it could hit the N1000/$1 mark by mid-November.
Another fun fact is that the disparity between the official rates and the black market rate is now over 100%. Data from the CBN website quotes the NAFEX rate at N440/$1, thus double that is about N880/$1.
Remember that , the exchange rate between the dollar and naira is volatile and traders claim there are no anchor rates to follow anymore. Most rates out there are not backed by closed deals but merely quotes.
According to some traders, a rate can only be confirmed when an actual transaction is consummated and different closed deals attract different rates.
