Overview

Traders have reported a decrease in the demand for dollars at the black market following Nigeria’s recent decision to float the naira. This drop in demand is not surprising, as numerous businesses that were previously forced to resort to the black market due to the scarcity of dollars in the official market will now return to official channels for their transactions.

The Central Bank of Nigeria (CBN) instructed commercial banks to freely sell forex at market-determined rates, breaking away from the practice of fixing prices. As a result, the naira experienced a decline, reaching as low as N755/$ in the official window before closing at N664/$.

This move is expected to enhance liquidity in the official market and reduce transactions in the black market. However, the decreased demand in the black market has not yet significantly impacted prices, with traders quoting the dollar at N760 on Thursday.

With the current exchange rate, the disparity between the official and parallel markets has decreased from 301 to 96.

 

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