Nigeria’s economic woe continues as Dollar nears N1,500 over scarcity in black market

Nigeria’s economic woe continues as Dollar nears N1,500 over scarcity in black market

Nigeria’s currency, the naira, is edging closer to a record-low of N1,500 against the US dollar, reflecting a severe dollar shortage in the parallel market.

On Tuesday morning, the exchange rate reached a fresh low of N1,460 per dollar in the parallel market, and traders anticipate further weakness in the coming days as dollar shortages worsen.

Furthermore, the naira experienced an all-time low of N1,348.63 per dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday.

This marked a significant 33.87 percent decline compared to the N891.90 quoted on the previous Friday, according to data from the FMDQ.

During Monday’s trading, the exchange rate hit an intraday high of N1,414.94 per dollar, coinciding with a 36.68 percent drop in the daily FX market turnover to $64.29 trillion from $100.97 million recorded on the preceding Friday.

Investigations reveal a surge in the demand for dollars driven by legitimate needs, creating a challenging environment for importers and travelers who heavily rely on the parallel market.

Also, importers are struggling to secure necessary funds both from the official FX market and the black market.

Legitimate demands contributing to the increased dollar demand include Form A applications for Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees, and medical fees.

The scarcity is affecting Small and Medium Enterprises (SMEs) as well, as highlighted by the use of Form Q.

A street trader commented on the situation said , “The problem is that dollars are scarce in the market. People are not bringing dollars, and demand is so high, that is why the price is going up.”