The exchange rate between the Nigerian naira and the US dollar has reached N1,040 in the parallel market, reflecting increasing demand for foreign exchange that is surpassing supply.
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Forex traders have reported rates ranging from N1,035 to N1,045 per dollar, underscoring the difficulties faced by Nigerians in obtaining foreign currency for various transactions.
It is noteworthy that the official exchange rate remains at N776.8 to $1, emphasizing a substantial gap between the rates in official and unofficial markets.
The exchange rate disparity has now expanded to approximately 26%, or N265 per $1. This is compared to around N290 per $1 or 38.6% before the recent unification of exchange rates. The current rapid widening of the disparity suggests that the exchange rate may depreciate further, potentially reaching N1,200 per $1, to achieve the previous disparity of 38.6%.
Many Nigerians are grappling with the consequences of this exchange rate disparity, as rising demand and constrained supply continue to devalue the currency. Even the official foreign exchange window is facing challenges, with one anonymous forex buyer revealing that it has become nearly impossible to purchase forex through official channels.
Reports indicate that banks are currently holding nearly $20 billion in foreign currency swaps provided by the central bank, with an additional $8 billion estimated to be trapped as outstanding funds. These factors contribute to the ongoing foreign exchange issues in the country.
In a related development, journalist Eniola Akinkuotu claimed that he refused to exchange dollars at the official market rate, even though it meant incurring a loss. He explained that he took $500 to a Bureau De Change agent and insisted on changing it to naira at the FMDQ rate of N763.53 per dollar, instead of the agent’s rate of N1,010 per dollar. This decision resulted in a loss of N123,235 for him but was made to protect the Naira and the country’s currency.
Took this $500 to Bureau de change. They said the rate is N1010/$1 which means I get N505,000. I rejected it & told him I would be changing at official FMDQ rate of N763.53/$1 so I got N381,765. I made a loss of N123,235 but it was worth it. Let’s protect our country and currency pic.twitter.com/3rJp0aAWRC
— Eniola Akinkuotu (@ENIBOY) October 11, 2023
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