https://thestreetjournal.org/naira-depreciates-to-n745-per-dollar-at-parallel-market/

The naira has depreciated further against the dollar at the parallel and official sections of the foreign exchange market.

Bureaux De Change operators (BDCs), popularly known as ‘abokis’, while speaking on Monday afternoon, December 12, quoted the naira at N745 to the dollar at the street market.

The figure signifies a depreciation of N5 or 0.7 percent from the N740 it traded over a week ago, The Cable reports.

The street traders put the buying price of the dollar at N735 and the selling price at N745, leaving a N10 profit margin.

“Demand is fair. People are not rushing to buy dollars at the moment,” a BDC operator in the Victoria Island area of Lagos said.

At the official market, the local currency fell by 0.11 percent to close at N446.50 per dollar on Friday, according to details on FMDQ OTC Securities Exchange, a platform that oversees official foreign-exchange trading in Nigeria.

However, the Central Bank of Nigeria (CBN) has continued to intervene in the official market to maintain the stability of the local currency.

An analysis of the CBN’s economic reports showed that the apex bank’s interventions in the forex market stood at $12.74 billion in the first eight months of 2022.

When compared with the same period in 2021, the interventions declined by 13.6 percent from $14.74 billion.

Recall that the apex bank, last week, announced a new policy which limits weekly over-the-counter cash withdrawals by individuals and corporate entities to N100,000 and N500,000, respectively.

Since then, the policy has generated mixed reactions from the many Nigerians.

after Obi win, e go be 1 dollar to 300 , its a gradual process, na then I go finally venture into forex

The economy is finished until Buhari departs.

It's good to note that the 3 leading presidential candidates have promised not only to make the Naira market reflective again (which Buhari suspended) but also to end the subsidy on petrol and deregulate the price. These 2 policies will not only greatly reduce the pressure on the Naira but also encourage an influx of dollars into the economy.

No sound person will supply forex at the official rate of 440 while the black market rate is 735. It is just unrealistic. Lamido Sanusi said the differential between the 2 rates must never be more than 3%.
Anything more will cause distortions in the economy and sharp practices.

The differential today is close to 70%. No wonder the economy is languishing and is in a mess. That's all Buhari's handwork

grandstar:
The economy is finished until Buhari departs.

It's good to note that the 3 leading presidential candidates have promised not only to make the Naira market reflective again (which Buhari suspended) but also to end the subsidy on petrol and deregulate the price. These 2 policies will not only greatly reduce the pressure on the Naira but also encourage an influx of dollars into the economy.

No sound person will supply forex at the official rate of 440 while the black market rate is 735. It is just unrealistic. Lamido Sanusi said the differential between the 2 rates must never be more than 3%.
Anything more will cause distortions in the economy and sharp practices.

The differential today is close to 70%. No wonder the economy is languishing and is in a mess. That's all Buhari's handwork

if you make it 735 official rate, cost of paying school fees and importation rises. The average n8gerian will feel the pinch and riots will break out.

jesmond3945:
if you make it 735 official rate, cost of paying school fees and importation rises. The average n8gerian will feel the pinch and riots will break out.

The problem isn't from the parallel market. It is from the official rate.

Because the CBN can't meet the demand from buyers at the official rate, they are forced to turn to the black market for forex. That causes it to depreciate too much.

If the CBN simply increases the price at the official rate to around 600, this will reduce demand at the official rate and enable the CBN to match demand. This will greatly reduce pressure at the black market. If the CBN goes further and resumes the sale of dollars to the BDCs, it will flood the black market with dollars. The Naira should hit around 610. There will be a convergence between the 2 rates.

The Naira's real exchange rate should be around N600.

It is Buhari's hatred of devaluation that has prevented a convergence of rates ever since he assumed office and it has also devastated the economy. He is neither a qualified economist nor is he the CBN and has no business dictating the exchange rate value.

grandstar:


The problem isn't from the parallel market. It is from the official rate.

Because the CBN can't meet the demand from buyers at the official rate, they are forced to turn to the black market for forex. That causes it to depreciate too much.

If the CBN simply increases the price at the official rate to around 600, this will reduce demand at the official rate and enable the CBN to match demand. This will greatly reduce pressure at the black market. If the CBN goes further and resumes the sale of dollars to the BDCs, it will flood the black market with dollars. The Naira should hit around 610. There will be a convergence between the 2 rates.

The Naira's real exchange rate should be around N600.

It is Buhari's hatred of devaluation that has prevented a convergence of rates ever since he assumed office and it has also devastated the economy. He is neither a qualified economist nor is he the CBN and has no business dictating the exchange rate value.

what you said is good on paper, it would reduce pressure a little bit. However, you know we are import dependent country. Increasing the official rate would make importers pay more and they would transfer same to the common man on the street. I think thats were buhari is coming from. I dont want to make the economic great and the common man to pay more.

jesmond3945:
what you said is good on paper, it would reduce pressure a little bit. However, you know we are import dependent country. Increasing the official rate would make importers pay more and they would transfer same to the common man on the street. I think thats were buhari is coming from. I dont want to make the economic great and the common man to pay more.

This has noth8ng to do with "good on paper". It has been done before and it worked.

When Lamido Sanusi took over from Charles Soludo as governor of the Central Bank in 2009, he met an official exchange rate of $1 - 120 at the official rate, while it was 190 at the black market.

His first act was to depreciate the Naira at the official rate to around 155 and the black market appreciated in value to around 160.

Secondly, prices of goods will drop and not increase. Why you would ask?

The prices of goods are priced at the black market rate and not the official rate. That's why prices have been skyrocketing of late. If it was the official rate of 440, prices of goods would be much cheaper, at around mid 2021 prices. So, once goods start being imported at N600 instead of 735, it will lead to a price drop