Dollar scarcity continues to bite hard in Nigeria

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Dollar to Naira Black Market Exchange Rate Today , Black Market Dollar To Naira Exchange Rate Today Naira to Dollar

Dollar scarcity continues to bite hard in Nigeria.

The pressure on the Naira has gotten worse as a result of the recent shortage of Dollar supply and rising demand. Despite the sustained CBN intervention in the FX market keeping the exchange rate at the I&E window stable, there has been a sizable depreciation at the black market.

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Due to the country’s FX shortage, it is getting harder for Nigerian students studying abroad to get the money they need for their tuition and maintenance because many commercial banks are now taking much longer to process Form A FX requests.

Several banks now take up to six weeks to process form A requests, and many banks significantly reduced the monthly spending limit on their Naira cards in March from US$100 to just $20.

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Due to rising FX demand and a lack of FX supply, Nigeria is currently going through one of its worst FX crises in history. Nigeria has not benefited from the high oil price brought on by the Russia-Ukraine conflict because of its low oil production and continued reliance on a subsidy system, which is expected to cost the nation at least N4 trillion this year.

Due to the complete lack of local refining capacity, Nigeria continues to spend a significant portion of its foreign exchange earnings on importing Petroleum Motor Spirit (PMS) and other refined products. High oil prices therefore result in higher costs for refined products. Despite a number of CBN projects, including the RT200 FX programme, the nation has also failed to increase its non-oil exports. As of Q1 2022, crude oil continued to dominate export earnings despite declining production capacity, accounting for N5.62 trillion or 79.16% of all exports.

Given that inflows are still meagre, CBN is unlikely to increase intervention levels at the I&E window anytime soon. By the end of 2022, our projection for the FX reserves is US$35.00 billion, which corresponds to a 5.4x cover of imports of goods and services. We anticipate the CBN to continue its current monthly intervention in the foreign exchange market with that reserve level.

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While FX rationing at the IEW has intensified the demand pressure at the parallel market, the parallel market premium of about 45 percent continues to support arbitrage opportunities. As the CBN has not yet started selling foreign currency to BDCs again, we anticipate the premium to remain wide. Beyond this, businesses and private citizens who import goods that are prohibited by the CBN will continue to obtain foreign exchange on the black market.

A fully owned subsidiary of FCMB Group Plc, CSL Stockbrokers Limited, Lagos (CSLS) is overseen by the Securities and Exchange Commission of Nigeria. A participant in the Nigerian Stock Exchange is CSLS.

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