On the illicit market, the naira drops to a record low of 915 to the dollar.
On Wednesday, the difference between the official and underground markets once again surfaced, and the value of the Nigerian naira dropped to a historic low of N915 per dollar.
Since the CBN floated the currency in June, the currency of the largest economy in Africa has faced pressure.
According to statistics from Aboki FX, the naira traded substantially worse at N915 per dollar on the black market on Wednesday than it did at its official opening rate of N757 per dollar on Tuesday.
The difference between the two values now stands at N158, which is the most since the central bank switched to a more flexible exchange rate to promote inflows.
reduce the difference between the two rates Ayo Teriba , CEO of Economic Associates (EA), encouraged the CBN to review its list of 43 ineligible FX goods and grant BDCs the same access as banks in order to promote fair competition.
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“The CBN must be persuaded to grant BDCs the same access as the banks in order to ensure the proper competition required for a unified rate, and the list of 43 valid things that the CBN has deemed ineligible for forex must be made eligible if we are sincere about our intentions to do so.
He stressed once more how crucial it was to reexamine the list of 43 foreign exchange commodities on the official market.
“Where you are rerouting transactions to another ‘window’ where a different pricing will apply. In order to continue autocratically excluding genuine participants and valid transactions and maintaining the various rates, we must either walk the words of unity.
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The goal of unifying the foreign currency markets was to streamline the process and increase dollar inflows. The official exchange rate fell by 40% as a result of this action, temporarily tying with the black market rate. The deficit has widened nonetheless because of the persistent mismatch between dollar supply and demand.
Low market liquidity is to blame for the devaluation and discrepancy in both rates, according to Ibrahim Tajudeen, head economist at ChapelHill Denham.
You will always discover a gap when there isn’t liquidity, he claimed, since demand is growing and there isn’t any liquidity in the market.
“I think it could get worse,” he continued, “when classes resume and people have to pay tuition abroad.”
According to Tajudeen, the existing value of the naira on the black market is not supported by the economic fundamentals, and the remedy is to boost inflows.
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