With the black market exchange rate high at about N900, the importers of the 41 items on the forex banned list of the Central Bank of Nigeria, which includes rice, private airplanes/jets, Indian incense, tinned fish in sauce (sardines), amongst others will have to increase the price of their products, Blueprint investigation has revealed.
Individuals and traders are still buying dollars at a premium rate in the black market, and this is expected to fuel inflation for goods that the Central Bank of Nigeria (CBN) is not providing foreign currencies for.
Also, considering the scarcity of dollars in the official market, which has pushed traders to the black market to quickly obtain forex, importers of products like television brands, cars and more items not produced in Nigeria will also raise the price of their goods, in a bid to recover the cost of obtaining the dollars in the parallel market.
Reacting, a Professor of Economics at the Olabisi Onabanjo University, Ago Iwoye, Ogun State, Sherrifdeen Tella, warned that if the situation continues, there might be dire consequences for the country.
He said the Naira may further depreciate should politicians release too much cash into the system.
Tella said, “If it is foreign currency, the economy will be awash with a lot of foreign currencies which on the one hand is good. But on the other hand, it is bad because it will cause a lot of inflation. It will further depreciate the naira because people will start changing the foreign currencies to naira that they can spend, and that will cause a further depreciation of the naira. That will result in a higher level of inflation because of the fact that it will lead to a higher cost of production.”
Meanwhile, the exchange rate between the naira and the US dollar improved by 2.29 per cent at the black market, trading at an average of N855/$1 for cash transactions, compared to an average of N875/$1 recorded in the previous trading session.
Also, the exchange rate at the cryptocurrency peer-to-peer FX market appreciated by 0.13 per cent to trade at a minimum of N859.9/$1 on Tuesday morning, compared to the N861/$1 that it traded at the same time on Monday, 7th November, 2022.
At the official market, an exchange rate of N461/$1 was the highest rate recorded during intra-day trading before it settled at N445.5/$1, while it traded as low as N439.98/$1 during intra-day trading.
Nigeria’s external reserve recorded a slight drop of 0.01 per cent to stand at $37.36 billion as of November 2022 from $37.37 recorded as of the previous day.