Exchange Rate Naira To Canadian Dollar Black Market
The exchange rate is the value of one currency for the purpose of conversion to another. The Nigerian Naira is the official currency of Nigeria, while the Canadian Dollar is the official currency of Canada. In Nigeria, there are two exchange rates: the official exchange rate and the black market exchange rate. The official exchange rate is determined by the Central Bank of Nigeria (CBN), while the black market exchange rate is determined by the market forces of demand and supply.
What is the Naira to Canadian Dollar Black Market Exchange Rate?
The black market exchange rate for Naira to Canadian Dollar is the rate at which the Naira is exchanged for the Canadian Dollar in the unofficial or parallel market. In Nigeria, the black market exists because of the scarcity of foreign exchange (Forex) caused by the low supply of Forex by the CBN.
As at August 2021, the Naira to Canadian Dollar black market exchange rate is around 1 NGN to 0.0024 CAD. This means that if you want to convert 1000 NGN to CAD, you will get around 2.4 CAD. However, this rate is not fixed and can change at any time due to factors such as inflation, economic policies, and political instability.
Why is the Black Market Exchange Rate Higher than the Official Exchange Rate?
The black market exchange rate is always higher than the official exchange rate because of the scarcity of Forex in the official market. The CBN controls the official exchange rate, which means that it can limit the amount of Forex that is available for purchase. This restriction creates a demand for Forex that cannot be met by the official market, leading to an increase in the price of Forex in the black market.
Additionally, the black market is not regulated by any government agency, which means that the exchange rate is determined purely by market forces. This lack of regulation can lead to a higher exchange rate as traders can sell Forex at a higher rate due to the scarcity of Forex in the official market.
What are the Implications of a High Black Market Exchange Rate?
A high black market exchange rate has several implications for the Nigerian economy. Firstly, it leads to an increase in the cost of goods and services as most businesses rely on Forex to import raw materials and finished products. This increase in the cost of goods and services can lead to inflation, which can have a negative impact on the standard of living of Nigerians.
Secondly, a high black market exchange rate can lead to a decline in foreign investment in the Nigerian economy. Foreign investors are discouraged from investing in a country with a high black market exchange rate as it can lead to uncertainty and instability in the economy.
What Can Be Done to Reduce the Black Market Exchange Rate?
To reduce the black market exchange rate, the Nigerian government needs to take several steps. Firstly, it needs to increase the supply of Forex in the official market by diversifying the economy and increasing exports. This will reduce the scarcity of Forex and reduce the demand for Forex in the black market.
Secondly, the government needs to ensure that the official exchange rate is competitive with the black market exchange rate. This can be achieved by ensuring that the official exchange rate reflects the true value of the Naira in the international market.
Conclusion
In conclusion, the black market exchange rate for Naira to Canadian Dollar is higher than the official exchange rate due to the scarcity of Forex in the official market. A high black market exchange rate can have several implications for the Nigerian economy, including inflation and a decline in foreign investment. To reduce the black market exchange rate, the Nigerian government needs to increase the supply of Forex in the official market and ensure that the official exchange rate is competitive with the black market exchange rate.