Presently, the US Dollar to Naira black market exchange rate in Lagos, Nigeria remains a crucial topic of interest for most individuals and businesses operating within the state. How the Naira performs against the United States Dollar has a significant impact on various economic activities which include import and export rates, remittances, and general market stability. This article delves into the (USD) Dollar To Naira Black Market Rate Today In Lagos, Nigeria.
Tracking and understanding the fluctuations in the Dollar to Naira exchange rate provides vital insights into the economic landscape and its potential impact on both local and financial transactions.
As one of Africa’s largest and most dynamic economies, Nigeria depends heavily on the exchange rate between the United States Dollar (USD) and the Nigerian Naira (NGN) to support international trade, investments, and daily transactions. Although the black market rate is unofficial, it still plays an important role in representing the real-time value of the Naira, usually displaying different rates compared to the official sources.
In this post, we will discuss extensively the factors influencing the ever-fluctuating exchange rate, highlighting its impact on the Nigerian economy and the lives of average citizens.
News On Dollar Rise
The Naira on Wednesday, 25th October 2023, appreciated against the US Dollar on the unofficial parallel market, widely referred to as the black market.
During the afternoon trading, the exchange rate was N1,300 per dollar, which represented a 0.76% increase (N10) compared to the N1,310 rate recorded on Tuesday on the black market.
The persistent foreign exchange pressure, worsened by the Naira reaching as low as N1,310 per dollar, showed signs of improving on Wednesday as demand slightly eased.
The most recent instance of Naira appreciation happened on October 3, 2023, when it increased by 0.79% (N8) against the US Dollar.
On Tuesday, the Naira experienced a significant 6.86% depreciation after having strengthened by 1.85% against the dollar on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
What Causes the Dollar To Rise?
In current times, the US dollar which is the world’s reserve currency, has become so strong and the effects of its rapid rise can be felt across the globe. The reason for this sudden surge in US dollars against the global currencies can be attributed to the rise in interest rates in the United States.
In August 2022, the Federal Reserve officials took a unanimous decision to raise their benchmark federal funds rate between 2.25 percent and 2.5 percent.
That year, the US dollar index which measured the value of the US dollar against many other major foreign currencies was up to 11 percent year-to-date. Additionally, the South African rand depreciated by -4 percent YTD against the US dollar, with major currencies like the Euro, and the British Pound seeing rapid ytd declines of about -11 percent and -10 percent respectively.
This drop in these currencies, negatively impacted Nigeria’s economy as its currency weakened. Below, we explain some of the other factors that caused the dollar to rise.
1. High Demand For Dollars
A major factor affecting the Naira/dollar exchange rate is the rising demand for US dollars.
2. Foreign Education
Per data released by UNESCO’s Institute of Statistics, the number of Nigerian students abroad increased from less than 15,000 in 1998 to over 71,000 in 2015. By 2018, this number rose to 96,702 students, according to the World Bank.
In the 1980s and 1990s, you would be hard-pressed to find parents who sent their children to primary and secondary schools abroad.
But presently, a large amount of the foreign exchange requests Nigerian banks get for school fees are for primary and secondary school education, some of which are for neighbouring African countries.
Foreign education cost Nigeria a whopping $28.65 billion between 2010 and 2020, according to the CBN’s publicly available Balance of Payments Statistics. If this sum were not transferred abroad but was part of CBN’s Foreign Exchange Reserves, the Naira would be stronger than it is today.
In the last 10 years, the foreign exchange demand for education and healthcare has cost the country almost US$40 billion.
3. More Imports Than Exports
Another reason why dollars continue to rise is that Nigeria imports more foreign goods than it exports locally produced wares.
4. Seasonal Activities
The FBNQuest reported that the surge in FX demand is largely related to seasonal factors like people going on vacation during the summer holiday season and the payment of school fees by Nigerian students studying abroad.
5. Lack Of Export Diversification
One of the top challenges with the naira’s valuation is the lack of export diversification and the high inflation levels in Nigeria that persist, particularly in the last few years. According to the latest.
According to a balance of payment data released by the CBN last year, income from oil and gas sales made 89 percent of the value of merchandise exports in the first quarter of 2022.
6. Loss In National Productivity
Losses in national productivity which are caused by insecurity, insufficient electricity, and poor infrastructure are also causes of the increase in the USD dollar to naira rate.
Effect Of Dollar Rise
Over the past 20 years, Nigeria has experienced various economic difficulties. The unstable exchange rate between the US Dollar and the Nigerian Naira is a significant area that constantly influences Nigerian economic stability.
To the common man, who has no direct dealings with the United States of America, an unstable exchange seems like a problem for only the Central Bank of Nigeria and its governor. But how exactly does this affect him?
In this section, we examine closely the effect of dollar rise in Nigeria, and the areas in its economy, this effect is most prominent.
1. Rise In Inflation
The expenses for importing goods and services into the country rise due to the naira’s depreciation. Nigerian’s cost of purchasing necessities goes up due to this practice, often referred to as imported inflation.
2. Decreased Purchasing Power
Clients’ purchasing power reduces as prices rise due to inflation. So, with the same amount of money, the common man can only buy less, which lowers the general standard of living.
Due to their dependence on imported raw materials, manufacturing, and construction are two industries that incur higher production costs. Businesses can reduce production or may lay off workers to reduce these expenses, which in turn spikes the unemployment rate.
4. High Interest Rates
The CBN may raise interest rates to fight inflation. The cost of borrowing increased for businesses and consumers due to this change. Similarly, it can lead to decreased consumer expenditure and company investment.
5. Foreign Debt
Nigeria’s external debt is often shown in foreign currencies. The cost of paying off this debt increases due to a weak naira, thereby diverting resources that may have been channelled to development programs instead.
6. Negative Impact On Foreign Investment
When Nigeria’s currency depreciates, foreign investors would not want to invest here. This is because they are worried that their value will decline when they convert their investments back into their local currencies.
7. Imbalanced Trade
Import costs rise with a falling Naira, which potentially reduces customer demand for imports. It might not also boost exports significantly, resulting in a trade imbalance that affects the country’s current account.
8. Increased Pressure On Foreign Reserves
As citizens fight to protect their wealth as the Naira’s value falls, demand for foreign currency may rise. Consequently, Nigeria’s foreign reserves, put in place to preserve exchange rate stability, will be put under strain.
9. An Uncertain Economy
Economic uncertainty caused by currency depreciation might deter long-term financial planning from companies and households. Citizens will start postponing making major financial decisions, which will slow down the economy further.
10. Challenges In Government Budget
The Nigerian government relies solely on oil revenue, which is usually represented in US dollars. A weakened naira against a rising dollar makes it harder for the government to finance its budget and public services because the revenue is worth less in local currency.
Has the Naira Ever Been Higher Than the Dollar?
Well, isn’t this a million-dollar question? The answer is yes, there was a time when the naira was higher than the US dollar. According to a statement from the CBN, in the 1970s and 1980s, Naira was stronger than the US, or at least on par with it.
Another account affirms that in 1972 when the Naira was first created, it was worth almost twice the dollar. You needed up to 2 US dollars to get just One Nigerian Naira. For over 10 years this value stayed the same.
Up to the year 1985, the Naira was also the equivalent of the Pound Sterling and was stronger than the Dollar. Before that year, financial planning at both government and individual family levels was easy to do.
Earning In Naira VS Earning In Dollar
With how hard naira earners have it in this economy, it has become unquestionably necessary to introduce Nigerians in this country to opportunities that will enable them to legitimately earn in US Dollars.
In the past, earning US Dollars while living in Nigeria used to be reserved for a certain class; these people became very wealthy because they got the right information at that time. But with the developments in technology especially the internet, regular citizens can now earn US Dollars from the comfort of their homes legally.
Below, we do a quick reveal of the advantages of earning in dollars compared to earning in naira.
Advantages Of Earning In Dollar
The harsh economic reality of Nigeria at the moment can be seen in the high rate of inflation sweeping the land. This has left many citizens struggling to make ends meet. Most families and individuals have limited options for finding their way out of this horrible situation. But, by earning in USD dollars, these people should gain a better head start against inflation than those who don’t.
Here, we listed out all the ways you can benefit from earning in dollars as a Nigerian living in Nigeria:
1. Protection From Inflation Devastation
By earning an extra income in dollars, you can be protected from the devastation brought on by inflation and currency devaluations which is prevalent in most African countries today. It will give you a hedge against inflation and enable you to move from lack to plenty.
2. Higher Value
The U.S. Dollars is largely higher than the Naira. Currently, 1 dollar equates to ₦798.736. This is the official CBN rate as of today, October 27th 2023. In the Black Market, 1 USD is converted to ₦1280.
If you earn 1,000 dollars for a service you rendered to a customer in the US, you’ll get a lump sum of ₦798,736 when you convert it using the CBN rate and ₦1280,000 when converted with the Black Market rate.
The amount you’ll earn after converting your salary in Dollars to Naira is something only a few people get monthly. While you’ll still be affected by the high rate of inflation when you spend in Nigeria, you’ll find things easier than those who are earning and spending in Naira.
When you think about it, there are only a few companies in the country that can pay their employees ₦798,736 a month. So, you should earn in Dollars.
The US dollar is a strong currency that rarely loses value. No matter how volatile it gets in the market, it will always be higher than the Naira. The Nigerian Naira is an unstable currency; it continues to depreciate no thanks to the nation’s unstable economy.
When you earn in Dollars as a Nigerian, you can expect the value of your earnings to be higher within a short period. What this means is that if you decide to reserve the Dollar amount you earn, you’ll get it at a higher amount later in the future when converted to Naira.
The stability in the value of Dollars and the steady devaluation of the Naira is another reason why you should start earning in Dollars.
4. Your Savings Appreciate
US Dollars is a strong and stable currency that is ideal for savings and investing. When you save in Dollars, there is a lower chance of the value of the money to depreciate. Matter of fact, it will appreciate.
When you earn and save in Naira, your money’s value will depreciate over time. The Naira is vulnerable to market fluctuations. And even with the present state of the nation, it may continue to lose its value. A very wise investment for you as a Nigerian would be to earn and save in Dollars.
5. Quicker Means Of Generating Wealth
If you want to generate wealth faster as a Nigerian, earning in dollars is a good way to do so. It will also help you reach your financial goals quickly. When you earn in dollars, its high value will help you crush your financial goals. Every time you convert your Dollar earnings, you’ll have more funds in Naira.
6. Seamless Global Transactions
If you are someone who usually does international transactions or trips, having dollars in your account can make these processes seamless and potentially save you from the hassles of unfavourable exchange rates.
Disadvantages Of Earning In Naira
There are certain advantages attached to earning in dollars, like higher purchasing power, global acceptance, safety from inflations, and stability. But, factors such as the exchange rate or the government deciding to float the naira can also affect the salary amount you earn in dollars versus naira.
What are the implications of the rising exchange rates? How does it put you at a disadvantage as a naira salary earner? The effects of the low value of the Naira will not only affect your plans to leave the country; these are other sectors the US dollar to Naira exchange rate will hit hard.
1. PTA, BTA, Visa Fees, Foreign School Fees Payment
Individuals earning in Naira but needing dollars to travel or study will probably be the ones hit the hardest by the new US dollar to naira exchange rate. Early in the year, where they could get $1,000 for up to ₦500,000, they would now need ₦798.736 to get the same $1,000. This amount is only good if it’s what you’re earning, rather than spending.
2. Hike In Food And Agricultural Produce
Nigeria imports a huge amount of its food components, a report released by the National Bureau of Statistics places Nigeria’s total Agricultural import in Q1, 2022 at ₦443.36 billion. As of Q1, 2021, Nigeria imports a larger percentage of its Agricultural produce from America and Europe, with both countries accounting for ₦514 billion of the total ₦630 billion spent on Agricultural produce imports in the quarter.
Nigeria’s impending food crisis is driven by local forces such as insecurity and compounded by the nation’s over-dependence on imports even for agricultural produce. Goods imported at high exchange rates are becoming more expensive and in turn increasingly unaffordable. The more costly these products are to import, the more you the consumer will pay.
3. Petroleum Availability/Subsidy
Nigeria is experiencing a distressing petroleum scarcity, due to quarrels between marketers and the Nigerian government. Marketers want an increase in the pump price of refined petroleum. Their demand is impacted by the increased price of crude oil in the global markets and the fact that Nigeria imports the refined petroleum it uses.
The effect of an increased Dollar to Naira exchange rate will affect the amount Nigeria spends on the importation of refined petroleum as the U.S. dollar is the currency used the most to buy Oil.
For every increase in the exchange rates paired with the rise in the price of crude oil, the cost of importing refined petroleum will increase. The landing cost of petroleum will also increase.
4. Increase In Transportation Prices and Business Logistics
For every rise in the price of petroleum or scarcity, there will be a corresponding rise in the cost of transportation. An NBS report released last year showed how the prices of transportation have been increasing between June 2021 and June 2022.
For example, in the North Central part of the nation, bus trips within the city in June 2021 which was ₦406.89 rose to ₦565.43 in June 2022. Okada ride per drop was ₦316.21 in June 2021 but spiked to ₦471.12 in June 2022.
Journey within cities in the South East increased from ₦336.48 to ₦560.67 between June 2021 and 2022. An increase in the cost of transportation is one of the major causes of the spike in inflation in the country.
But, the cost of petroleum is not the only thing hiking transportation costs, Nigeria imports both cars and motorcycles. Motorcycles worth ₦74.593 billion were imported from India, China, and Indonesia, used vehicles worth ₦72.321 billion were imported and vehicles, and aircraft parts worth ₦456.320 million were imported only in Q1, 2022.
So, when you receive a high price from your Uber driver or Okada man, they are not just charging you for the outrageous fuel prices they paid, they also have to pay back the “cooperative loan” they borrowed to afford the bike they’re using.
Black Market And Bank Rate Differences
The US dollar exchange rate to naira at the Black Market rate was bought at ₦1145 and sold at ₦1160 on Thursday 27th October 2023. You should note that the Central Bank of Nigeria does not recognize the rates given by the parallel market, and has instructed customers who want to use Forex to go to their respective banks.
Below we show the black market and bank rate differences, to show the contrast in both institutions’ prices.
|Dollar To Naira||Black Market Exchange Rate Today|
|Dollar To Naira||CBN Market Exchange Rate Today|
Dollar To Naira Black Market Rate Today
Currency vendors in Abuja Zone 4 market, reported that a dollar was bought at ₦1160 and sold at ₦1145 today the 27 October 2023, as against ₦1165 it traded on Wednesday 26 October 2023.
Furthermore, the second most traded currency in the world which is the Euro was traded at ₦1190 buy and ₦1170 sell respectively in the black market. Similarly, the Pound to Naira rate is ₦1400 buy, while you can sell it for ₦1380 at the black market rate.
In this section, we give a breakdown of different dollar amounts and their current black market rate equivalent.
|Amount In Dollars||Black Market Rate Equivalent|
(Note: prices may differ across platforms and are subject to change).
Frequently Asked Questions (FAQ)
Here, we have answered two crucial questions, which you may have about the US Dollar to Naira black market rate.
Yes, the parallel market is the same as the black market. When you’re researching USD to NGN exchange rates, you’ll find out that the unofficial parallel market is often referred to as the black market.
The strongest currency in the world is the Kuwaiti Dinar of Kuwait, it was introduced in 1960 and was previously equivalent to one pound sterling. 1 Kuwaiti dinar can buy USD 3.26 or 1 US dollar is equal to 0.31 Kuwait dinars.
The USD dollar to Naira black market rate today in Lagos, Nigeria, acts as a measure of the nation’s economic stability and development. Its constantly changing nature pinpoints the challenges and opportunities faced by the Nigerian economy, highlighting the need for more sustainable monetary policies and initiatives needed to boost the Naira’s value.
As citizens continue to navigate the difficulties of the foreign exchange market, there is a call for greater transparency and monitoring to curb the effects of the fluctuating exchange rates on businesses and the population at large.