Exchange Rate Of Naira To Dollar Black Market
As a Nigerian, it is no longer news that the exchange rate of the Naira to Dollar in the black market has been a topic of concern in recent times. The Nigerian economy has been fluctuating, and this has affected the purchasing power of the Naira. The black market is one of the places to get Dollar in Nigeria, and the exchange rate is often higher than the official rate.
What is the Black Market?
The black market is the informal sector where goods and services are exchanged without government regulations. It is a place where people buy and sell currencies, goods, and services without going through the official channels. In Nigeria, the black market is where people go to buy foreign currencies such as Dollar, Euro, and Pounds.
The black market is not regulated, and the exchange rate is determined by demand and supply. In other words, the more the demand for a particular currency, the higher the price. On the other hand, the more the supply, the lower the price. This is why the exchange rate of Naira to Dollar in the black market is often higher than the official rate.
Factors Affecting the Exchange Rate of Naira to Dollar in the Black Market
Several factors affect the exchange rate of Naira to Dollar in the black market. These factors include:
1. Inflation
Inflation is the rate at which the general price level of goods and services increases over time. In Nigeria, the inflation rate has been on the rise, and this has affected the exchange rate of Naira to Dollar in the black market. When the inflation rate is high, the value of the Naira decreases, and this leads to a higher exchange rate of Naira to Dollar in the black market.
2. Political Instability
Political instability is another factor that affects the exchange rate of Naira to Dollar in the black market. When there is political instability in a country, investors tend to withdraw their investments, and this leads to a decrease in the demand for the Naira. This, in turn, leads to a higher exchange rate of Naira to Dollar in the black market.
3. Demand and Supply
Demand and supply are the most critical factors that affect the exchange rate of Naira to Dollar in the black market. When there is high demand for Dollar in Nigeria, the exchange rate of Naira to Dollar in the black market increases. On the other hand, when there is an excess supply of Dollar, the exchange rate of Naira to Dollar in the black market decreases.
Current Exchange Rate of Naira to Dollar in the Black Market
As of August 2021, the exchange rate of Naira to Dollar in the black market is around 1 USD to 515 NGN. This means that if you want to buy 1 USD, you will have to pay around 515 NGN in the black market.
Conclusion
The exchange rate of Naira to Dollar in the black market is often higher than the official rate due to several factors, including inflation, political instability, and demand and supply. It is essential to stay abreast of the current exchange rate to make informed decisions when buying and selling foreign currencies.