Forex: Official, black market rates close to parity

Forex: Official, black market rates close to parity

The exchange rate for the Naira and the Dollar has almost reached parity following the central bank’s crackdown on Binance, a platform for trading cryptocurrencies.

Research indicates that the exchange rate has averaged N1600/$1 in both the official and parallel markets.

Although the rates are not identical, they have fluctuated between N1590 and N1630 in both markets, respectively.

This results in an exchange rate disparity of less than 2%, significantly below the 5% often considered as an acceptable premium between the official and parallel market rates.

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This narrow margin has been consistent for about 9 trading days, with a disparity as low as 0.2%. The previous closest period was 8 days, from June 19 to June 30, 2023, with a disparity of 0.3%.

Since Binance discontinued the pairing between the Naira and the stablecoin USDT, foreign currency traders seem to be aligning their quotes with the official market rates.

Findings by Nairametrics also indicate that retail forex traders, such as banks and International Money Transfer Operators (IMTOs), reflect market-determined rates, which are closer to, and in some cases, weaker than the black market rates.

Exchange rate disparity between official, black market fall to all time low