Exchange Rate Of Naira To Dollar In Black Market
The exchange rate of Naira to Dollar in the black market has been a major concern for Nigerians in recent times. The value of the Naira has been fluctuating against the Dollar, making it difficult for people to plan and budget for their expenses.
What is the Black Market Exchange Rate?
The black market exchange rate is the exchange rate of currencies that is not regulated by the government or official exchange rate. It is also known as the parallel market exchange rate. It is usually higher than the official exchange rate because it is influenced by supply and demand in the market.
Why is the Black Market Exchange Rate Higher?
The black market exchange rate is higher because of the scarcity of foreign exchange in the country. The demand for foreign exchange is high due to the importation of goods and services, payment of school fees, medical bills, and other expenses.
The supply of foreign exchange is low because of the drop in the price of oil, which is the major source of foreign exchange for the country. The Central Bank of Nigeria (CBN) has also restricted access to foreign exchange for some items, which has further reduced the supply of foreign exchange in the market.
What is the Current Black Market Exchange Rate of Naira to Dollar?
The current black market exchange rate of Naira to Dollar is around 500 Naira to 1 Dollar. This rate is not fixed and can change at any time depending on the demand and supply of foreign exchange in the market.
Effects of the High Black Market Exchange Rate
The high black market exchange rate has negative effects on the economy and the people of Nigeria. Some of these effects include:
- Inflation: The high exchange rate leads to an increase in the prices of goods and services, which leads to inflation.
- Reduced Investment: The high exchange rate discourages foreign investors from investing in the country because it reduces the value of their investments.
- Reduced Purchasing Power: The high exchange rate reduces the purchasing power of the people, making it difficult for them to buy goods and services.
- Reduced Economic Growth: The high exchange rate reduces economic growth because it makes it difficult for businesses to import raw materials and equipment needed for production.
What Can be Done to Reduce the High Black Market Exchange Rate?
There are several things that can be done to reduce the high black market exchange rate. Some of them include:
- Increasing the Supply of Foreign Exchange: The government can increase the supply of foreign exchange by diversifying the economy and increasing the production of non-oil exports.
- Removing Restrictions on Foreign Exchange: The government can remove restrictions on foreign exchange to allow for more access to the foreign exchange market.
- Stabilizing the Price of Oil: The government can stabilize the price of oil by investing in alternative sources of revenue and reducing dependence on oil.
- Improving the Business Environment: The government can improve the business environment to encourage foreign investors to invest in the country.
Conclusion
The exchange rate of Naira to Dollar in the black market is a major concern for Nigerians. The high exchange rate has negative effects on the economy and the people of Nigeria. The government can take steps to reduce the high exchange rate by increasing the supply of foreign exchange, removing restrictions on foreign exchange, stabilizing the price of oil, and improving the business environment. It is important for the government to take action to address this issue and improve the economy of the country.