High Demand for Dollars Weakens Naira to N787/$1 at Black Market

By Dipo Olowookere

The Naira is apparently getting the negative effect of the decision of the Central Bank of Nigeria (CBN) to redesign the current banknotes in circulation for new ones.

On Wednesday, at a special press briefing in Abuja, the CBN Governor, Mr Godwin Emefiele, informed newsmen that the bank had obtained approval from President Muhammadu Buhari to change the looks of the N200, N500, and N1,000 notes.

While speaking at the press conference, Mr Emefiele said the new Naira notes would be introduced on Tuesday, December 15, 2022, and emphasised that the old notes must be wiped out of the system by January 31, 2023.

According to him, the reason for this action is to have full control of the cash in the financial system, as it was observed that about 80 per cent of the total cash in circulation was not in the banks, indicating that some persons have hoarded the local currency.

After this announcement was made, it was speculated that the Naira would suffer for it as those with the cash would want to use the black market segment of the foreign exchange market to change their hidden funds.

This may already be playing out as the rush for Dollars at the parallel market is putting undue pressure on the Nigerian currency.

On Friday, the domestic currency was exchanged with the greenback at N787/$1 in the unofficial FX segment compared with the previous day’s value of N769/$1.

This showed that the Naira has lost N18 or 2.34 per cent in less than 24 hours on the streets.

A few forex hawkers who Business Post chatted with in Lagos confirmed that the demand for Dollars is gradually increasing, and because of the shortage in the market before the CBN Governor’s announcement has made things worse.

“We don’t even have the Dollars to sell to our customers, and when demand surpasses supply, you know the implication. This is what is happening at the moment,” one of the FX sellers, Alhaji Isa, told this newspaper.

At the moment, it is not certain what the central bank will do to tame the issue. It is anticipated that speculators would want to take advantage of the situation to make more gains.