Price Of Dollar In Black Market In Nigeria
The Nigerian economy has been struggling for a while now, and one of the major issues affecting the country is the fluctuation in the price of the dollar. The dollar is the world's primary reserve currency, and its value affects the economies of other countries. In Nigeria, the price of the dollar in the black market has been a major concern for citizens and the government alike. This article will discuss the price of the dollar in the black market in Nigeria, its causes, and its effects on the economy.
What is the Black Market?
The black market is an illegal market where goods and services are bought and sold without government regulation. In Nigeria, the black market is where people buy and sell foreign currencies, including the dollar. The black market rate is usually higher than the official exchange rate, which is set by the Central Bank of Nigeria.
Causes of the Fluctuation in the Price of Dollar in the Black Market
One of the major causes of the fluctuation in the price of the dollar in the black market is the scarcity of foreign exchange. Nigeria is heavily dependent on imports, and the country's foreign exchange earnings have been declining due to low oil prices. As a result, the Central Bank of Nigeria has been rationing foreign exchange, which has led to a shortage of dollars in the market. This scarcity has driven up the price of the dollar in the black market.
Another cause of the fluctuation is the activities of currency speculators. These are people who buy and sell foreign currencies, including the dollar, in the black market with the aim of making a profit. Their activities can drive up the price of the dollar in the black market.
Effects of the Fluctuation in the Price of Dollar in the Black Market
The fluctuation in the price of the dollar in the black market has several effects on the Nigerian economy. One of the major effects is inflation. As the price of the dollar goes up, the prices of imported goods also increase. This makes it more expensive for Nigerians to buy goods and services, leading to inflation.
The fluctuation in the price of the dollar also affects businesses in Nigeria. Many businesses rely on imported goods and services, and as the price of the dollar goes up, their costs increase. This can lead to a decrease in profits or even closure of the business.
Measures to Address the Fluctuation in the Price of Dollar in the Black Market
The Nigerian government and the Central Bank of Nigeria have taken several measures to address the fluctuation in the price of the dollar in the black market. One of the measures is the introduction of a flexible exchange rate policy. This policy allows the exchange rate to be determined by market forces, which can help to reduce the gap between the official and black market rates.
Another measure is the ban on the sale of foreign exchange to importers of certain goods and services. This measure is aimed at reducing the demand for foreign exchange and conserving the country's foreign exchange reserves.
Conclusion
The fluctuation in the price of the dollar in the black market is a major concern for the Nigerian economy. It has several effects on the economy, including inflation and a decrease in business profits. The Nigerian government and the Central Bank of Nigeria have taken measures to address the issue, but more needs to be done to stabilize the exchange rate and ensure the stability of the Nigerian economy.