Dollar to Naira Black Market
For many Nigerians, the rate of the naira’s exchange to the dollar on the black market has been of great concern. The Central Bank of Nigeria (CBN) has determined the official exchange rate, which is presently N452.11 to $1. As of January 15th, 2023, the black market rate, which is based on supply and demand, is substantially higher, at about N747 to $1.
Both individuals and businesses in Nigeria have been affected by the high black market rate. One of the key issues is that it’s challenging for individuals and businesses to effectively plan and budget for their costs.
Cost estimates can be challenging since the official exchange rate frequently does not represent the actual cost of products and services. Plus, getting dollars at bank rates is very difficult. So, most people are left with no choice but to get from the black market, which is just so expensive. For both people and businesses, this may result in financial losses.
Additionally, it also promotes corruption and illegal activity, which is a problem. People trying to evade taxes or launder money frequently use the “black market rate.” In addition to hurting the economy, this compromises the reliability of the financial system.
Reason For High Dollar to Naira Black Market Rate
The official and black market rates for the naira to dollar exchange rate vary for a variety of factors. The gap has become almost twice as large, and it continues to go up day by day.
One explanation for this is that the CBN has strong currency restrictions in place that restrict the quantity of dollars that may be bought at the official rate.
Due to the shortage of dollars at the official rate caused by this, the black market price has increased. Hence, people and businesses buy dollar goods and services at an exorbitant black market rate.
Another issue is that Nigeria’s economy is very dependent on oil exports, and the recent decline in oil prices has made it difficult to get foreign cash. The difference between official and black market rates is a result of this as well.
Economic Disadvantage Of A High Black Market Rate
The black market exchange rate between the naira and the dollar has a number of detrimental effects on the Nigerian economy. Making it challenging for businesses to function is one of the key effects. Since there aren’t enough dollars available at the official rate, it’s challenging for many businesses that import goods and services to get the money they require. Due to this, goods and services may cost more, and businesses may find it challenging to compete.
It may cause inflation, which is another effect. The black market rate can cause a decline in the value of the naira when it is higher than the official rate. This may result in higher pricing for goods and services, making it more challenging for consumers to pay for the necessities. As a matter of fact, the price of every commodity in the market has increased by at least 30% in less than 12 months.
Conclusion
The exchange rate between the naira and the dollar on the black market has long been a significant source of worry in Nigeria. The large difference between the official rate established by the CBN and the black market rate determined by supply and demand has caused a lot of problems for both people and businesses.
There are many causes for this difference, including severe currency controls and Nigeria’s economy’s reliance on oil exports. This has detrimental effects on the Nigerian economy, makes it challenging for firms to function, and causes inflation. To check the live chart price of the dollar to naira, platforms like Aboki FX are trusted to have correct rates.