Category: Business

Naira Strengthens By 0.90% As Dollar Supply Increase

Dollar to naira exchange rate today

The Nigerian Naira has appreciated significantly against the US dollar, marking a 0.90 per cent increase as the official foreign exchange (FX) market saw a surge in supply this Tuesday.

According to data from the FMDQ Securities Exchange, the Naira closed at N1,603.38 per dollar, a significant improvement from Monday’s rate of N1,617.96 at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

The intraday trading witnessed the Naira climbing to a high of N1,637 per dollar from Monday’s low of N1,650/$1, and the day’s lowest exchange rate also strengthened, closing at N1,425.35 compared to N1,511 the day before.

This appreciation was fueled by a 27.09 percent increase in the dollar supply in the market. On Tuesday, transactions totaled $122.18 million, a substantial rise from $96.13 million recorded on Monday.

Contributors to this supply include banks and other willing sellers and buyers in the FX market.

Parallel market figures also mirrored this positive trend, with the Naira appreciating by 0.81 percent to the average of N1,605 against the dollar.

Exchange rates in this sector saw dollars being traded within a range of N1,600 to N1,612.

Market analysts link this fortuitous uptick to the Central Bank of Nigeria’s (CBN) recent decision to hike the Monetary Policy Rate by 400 basis points to 22.75 percent, up from 18.75 percent, to combat persistently high inflation rates among other economic challenges.

Despite these gains, concerns remain about the Naira’s stability. The Economist Intelligence Unit (EIU) highlights ongoing challenges such as high inflation, negative real interest rates, and a scarcity of foreign reserves that continue to undermine confidence in the Naira, even after a 45 percent devaluation in February.

The EIU forecasts caution against expecting another devaluation but suggest that foreign borrowing might be leveraged to bolster foreign reserves, potentially stabilizing the Naira towards the end of 2024.

Looking forward, the EIU predicts a gradual weakening of the Naira, projecting an exchange rate of N1,770:US$1 by the end of 2024 and N1,817:US$1 by the end of 2025.

The report also forecasts a more significant depreciation by 2028, with an expected rate of N2,381:US$1, attributed to monetary and fiscal policy challenges and fluctuating world oil prices.

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Canadian Dollar To Naira Black Market Today

The Canadian Dollar to Naira exchange rate in Nigeria’s informal currency trading circles, popularly known as the black market, has reached N1,153.469 as of March 10, 2024.

These transactions, typically facilitated by informal traders known as Abokis, have seen a significant increase, highlighting the ongoing volatility in the foreign exchange market.

The parallel market, operating independently from the official banking system, reflects the real-time supply and demand dynamics for foreign currencies in Nigeria.

While it offers an alternative route for obtaining foreign currencies, the black market is fraught with risks, including the potential for scams, underscoring the importance of caution among those engaging in such transactions.

As of today, exchanging 100 Canadian Dollars (CAD) in the black market would result in N115,346.90, while CAD1000 exchanges for N1,153,469.00, rates that significantly deviate from the official exchange rates.

This disparity underscores the challenges faced by individuals and businesses requiring foreign currency for international transactions, further complicating the economic landscape in Nigeria.

The reliance on the black market for currency exchange is indicative of the broader issues plaguing the country’s foreign exchange market, including stringent currency controls and limited access to foreign currencies through official channels.

These challenges have prompted many to turn to the parallel market, despite the inherent risks and legal implications.

The Nigerian government and the Central Bank of Nigeria (CBN) have made efforts to stabilize the Naira and streamline the process of obtaining foreign currencies.

However, these measures have yet to fully address the demand-supply gap that fuels the parallel market’s existence.

As the exchange rate for the Canadian Dollar continues to climb in the parallel market, the call for comprehensive reforms in Nigeria’s foreign exchange policies grows louder.

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Cryptocurrency Experts Reveal ‘Danger’ Of Binance Exit From Nigeria

House Of Reps Committee Issues Arrest Order For Binance Executives

Binance’s exit from Nigeria could potentially exacerbate youth unemployment in the country, according to experts and cryptocurrency enthusiasts.

Naija News reports that the Cryptocurrency giant Binance Holdings Ltd announced last week that it was leaving the Nigerian market and discontinuing all its services for the naira.

In an official statement on its website, the firm said the crypto exchange will automatically convert naira balances to USDT from March 8 at 8:00 a.m. UTC but will cease support for NGN deposits after 14:00 UTC today.

According to the crypto company, withdrawals will become unsupported after March 8 at 6:00 a.m. UTC, adding that the conversion rate for automatic conversions will be 1 USDT per 1,515.13 naira.

However, experts in this field have expressed their concerns over the recent prohibition of Binance naira operations in Nigeria, urging the government to explore more effective strategies for handling the country’s ongoing foreign exchange difficulties.

An economist at Lotus Beta Analytics, Shedrach Israel, during an interview with journalists, remarked that the government’s recent action is akin to “trying to cure malaria with paracetamol”.

He argued that the ban on Binance will not resolve the depreciation of the naira.

“I don’t know why the cryptocurrency is being seen as sabotage on the exchange rate because the cryptocurrency is not the major means by which the dollar is flowing in Nigeria. Banning Binance is like giving a malaria patient paracetamol. Although paracetamol may cure the pain of malaria, it does not cure the sickness.

“Similarly, banning Binance has not stopped the naira from falling because the issue is bigger. Binance is just a bit of how much liquidity the dollar has in Nigeria,” Israel told The PUNCH.

He also urged the Central Bank of Nigeria (CBN) to investigate the forex holdings of top Nigerian politicians.

“These people, whether politicians or private citizens, who have stored up forex should be made to convert their money to naira, otherwise, the ban would not be effective.

“Although the CBN governor claimed about $26bn had left Nigeria through Binance unaccounted, the fact is that Binance uses peer-to-peer trade, which means that there is inflow and outflow of naira in the economy. If $26bn has gone out, how much has come in? Binance is not our problem. Some Bureau de Change operators are possibly richer than Binance users,” he added.

According to a report by the National Bureau of Statistics (NBS), the unemployment rate for youth aged 15-24 in Q2 2023 was 7.2%.

Naija News understands that this figure shows a slight increase from the previous quarter, where the rate stood at 6.9%.

Recent data also suggests that approximately 22 million individuals, accounting for 10.3% of Nigeria’s total population, currently possess digital currency.

In September 2023, the Securities and Exchange Commission of Nigeria released an official statement explicitly stating that Binance Nigeria is not registered or regulated by the SEC. This declaration classifies the operations of the well-known global cryptocurrency exchange as illegal and unauthorized within Nigeria.

However, in December 2023, the central bank altered its position on crypto assets in the country and instructed banks to disregard the previous ban on crypto transactions.

A cryptocurrency trader, John Odiba, mentioned that the impact of Binance’s departure from Nigeria may have both positive and negative consequences, but he believes that the positive outcomes will prevail in the future.

“The effect of Binance’s exit on Nigerian users can be both positive and negative. One of them is that it could lead to decreased liquidity in the Nigerian cryptocurrency market, resulting in higher transaction costs and less favourable trading conditions for users. Nigerian users may face some limitations in accessing certain cryptocurrencies and trading pairs that were previously available on Binance, potentially hindering their investment opportunities,” he said.

Odiba mentioned that the lack of Binance could potentially pave the way for the success of local cryptocurrencies such as the eNaira.

“The absence of Binance could create space for local cryptocurrency exchanges to thrive, offering Nigerian users more options tailored to their needs, in the long run,” he said.

As per a cryptocurrency enthusiast named Godwin Ojonugwa, his primary source of revenue comes from engaging in Binance peer-to-peer transactions.

He mentioned that he managed to finance his education and construct a suitable residence solely through this trading activity. Expressing concern, he stated that the existing limitations have adversely affected his business, leading to fears of potential unemployment.

“Binance has made me a millionaire. I went to school and built my first house with Binance trade. Banning it has made business difficult and I am afraid of becoming unemployed,” he said.

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