Fear as Naira Devalues to N765/$1 at Black Market

By Dipo Olowookere

The exchange rate of the Naira to the Dollar in the black market window of the foreign exchange (forex) market in Nigeria is not looking good, and this has heightened fears among traders and investors.

For investors, it has almost become an everyday affair for the Nigerian currency to lose its value against the United States currency because holding the Naira is risky, especially for portfolio investors.

For FX traders on the streets, the market is becoming too volatile, and they are very cautious that things might swing either way anytime soon. Each day is treated as if it were the last.

At the unofficial market on Tuesday, the Naira was traded against the greenback at N765/$1, in contrast to N760/$1 it was transacted on Monday, indicating a decline of N5 or 0.66 per cent in less than 24 hours.

“We don’t even understand what is happening at the moment,” one of the FX traders in Lagos, Alhaji Isa, told Business Post this afternoon.

“I hope you remember I told you last month that if care was not taken, the Naira would hit N750/$1 this month. Has this not come to pass?” Alhaji Isa asked.

“You see, the CBN (Central Bank of Nigeria) and the banks are not helping matters. They need to resume the sale of Dollars to us; we understand the market and can ease the pressure on the Naira,” he submitted.

In June 2022, the president of the Association of Bureaux de Change Operators of Nigeria (ABCON), Mr Aminu Gwadabe, blamed the central bank for the steady fall of the value of the local currency against the greenback at the market.

In an interview with The Punch, he said some of the regulatory policies of the apex bank were affecting the Naira value in the FX market.

“There are a lot of inhibitive regulatory policies. In Nigeria now, for you to say you have a licence to operate as International Money Transfer Operator, the capitalisation is N2 billion for a local company.

“A foreign company comes in and gets a licence at $1 million. How much is $1 million compared to N2 billion or N600 million?

“This is for a foreign company that wants a licence of IMTO, but for a citizen, you have to cough out N2 billion? So, it is not encouraging small players,” he said.