Parallel market upstages official exchange rates
HE renewed confidence induced by the outcome of the recent election may have sustained the winning streak of the naira against the dollar since last week, with the parallel market (Black Market) rates upstaging the official exchange rate.
Specifically, at the parallel market across various areas in Lagos, yesterday, the dollar exchanged for N185, N190, N193, and N198, giving an average exchange rate of N191.5.
For example, at Surulere area, it was N185; in Ikeja, N198; and in Festac, it sold for N190; while in Lagos, it was exchanged for N193.
This is against the official exchange rate of N197 per dollar, eliciting concerns on why the rate at the parallel segment could fall to as low as N185, translating to a wide margin of N12 between the Interbank and the black markets.
Hints from the President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, showed that the naira gained between N27 and N30 since last week Tuesday.
Aminu had optimistically speculated that the naira would rise with the successful elections and anticipated changes that would bring about efficiency in foreign exchange management, urging those in possession of the dollars to offload them immediately.
But the upward swing the local currency’s outing may be attributed to the reduced pressure on the demand and the offloading of the hoarded dollar ahead of the election results.
Afrinvest Securities Limited, in a report, noted that corporate customers who had earlier amassed dollars before the presidential election to hedge against anticipated political unrest have reduced their demands for the Greenback and chosen to convert to the local unit.
“We anticipate that the value of the Naira would appreciate gradually with time even though saddled with fetters of plunging oil prices,” analysts at the securities company had predicted.
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