5 people benefiting from the fall of Naira -Economy
– The Naira has plunged more than 70% in the black market as against
the parallel market
– Parallel market traders as at yesterday was selling at N400 – USD1
– The widening premium between the parallel market rates and the
official rates have worsened the currency situation
– The slump comes amid concerns about the Naria's devaluation and the
global slump in crude oil prices
Following the unprecedented free-fall of the Naira in value against
the US Dollar, the currency has plunged more than 70% in the black
market when compared to the parallel market since the Central Bank
adopted its "managed float" exchange rate system.
Naira over the past months has been depreciating, hitting new lows oftentimes.
The widening premium between the parallel market rates and the
official rates have increased the activities of speculators and round
tripping further worsening the currency situation.
Several other market participants are also benefiting every day the
Naira plummets against the dollar at the parallel market.
According to Nairametrics, here's a list of people who stand to gain
from the weak Naira:
1. Nigerians in Diaspora This is perhaps the best time to live and
work outside Nigeria especially if your income is in dollars. Sensing
blood, many of them exchange their dollars in little tranches
believing that today's rate will always be cheaper than tomorrow. Some
believe this is the best opportunity to buy land and houses as the
value of the dollar has now risen by about 70% against the Naira while
property prices have been somewhat depressed.
2. Commercial banks Banks have been under pressure since the price of
oil began its devastating fall in July 2014. With huge exposures to
the oil and gas sector they have seen their loans increasingly become
risky with borrowers missing out on their obligations. However, they
have also posted massive gains from forex as can be seen in their
income statements at the end of financial year 2014 and the first 9
months of 2015.
Most people who purchase items online have also confirmed that banks
charge them as much as N290 to the dollar even thought the CBN pegs
the rate at around N199.
3. Bureaux de Change (BDC) Operators
They perhaps the biggest benefactors of Nigeria's forex woes. The CBN
in January banned sale of forex to BDC operators accusing them of
buying forex from the CBN at N199 and then selling at the black
market. The CBN also noted that the BDC's buy dollars from the CBN at
N197 only to sell to their customers at N250.
According to the CBN, BDC has risen from a mere 74 in 2005 to 2,786 BDCs today.
4. Exporters Businesses engaged in exports are also huge benefactors
of the declining exchange rate. Revenues from their exports officially
should route through the CBN as export proceeds however it is
understood that some of them move a chunk of that to the black market.
With gains as high as 50% most of them find it hard to resist the lure
of selling their hoard at the black markets rather than at the
official window.
5. Friends and associates of the Central Bank of Nigeria (CBN)
Reports suggests that people close to the management of the CBN or
indeed the government are also befitting from the fall of the Naira.
They get preferential treatment from the CBN by buying at official
rates rather than at the black market rates where a lot of Nigerians
go to.
In a related development, the Naira has continued its unprecedented
freefall in value against the US Dollar. The national currency is now
valued at N352 to USD1 on the parallel market, falling in value from
N347 to the dollar yesterday.
While some market operators did sell at N352 – USD1 yesterday, the
market rate appears to have been in flux between N347 – N352. Our
currency was trading within a range of 352 and 360 a dollar on the
parallel market on Wednesday, February 17, down to a new record low
from a range 347 to 352 on Tuesday due to persistent dollar shortages
amid control by the central bank.
If you want to keep track of the issues and events that will effect
the economy and the strength of the Naira, you can read our updates on
the price of oil and the Naira – US Dollar exchange rate on the
parallel market.
Source:Naij
the parallel market
– Parallel market traders as at yesterday was selling at N400 – USD1
– The widening premium between the parallel market rates and the
official rates have worsened the currency situation
– The slump comes amid concerns about the Naria's devaluation and the
global slump in crude oil prices
Following the unprecedented free-fall of the Naira in value against
the US Dollar, the currency has plunged more than 70% in the black
market when compared to the parallel market since the Central Bank
adopted its "managed float" exchange rate system.
Naira over the past months has been depreciating, hitting new lows oftentimes.
The widening premium between the parallel market rates and the
official rates have increased the activities of speculators and round
tripping further worsening the currency situation.
Several other market participants are also benefiting every day the
Naira plummets against the dollar at the parallel market.
According to Nairametrics, here's a list of people who stand to gain
from the weak Naira:
1. Nigerians in Diaspora This is perhaps the best time to live and
work outside Nigeria especially if your income is in dollars. Sensing
blood, many of them exchange their dollars in little tranches
believing that today's rate will always be cheaper than tomorrow. Some
believe this is the best opportunity to buy land and houses as the
value of the dollar has now risen by about 70% against the Naira while
property prices have been somewhat depressed.
2. Commercial banks Banks have been under pressure since the price of
oil began its devastating fall in July 2014. With huge exposures to
the oil and gas sector they have seen their loans increasingly become
risky with borrowers missing out on their obligations. However, they
have also posted massive gains from forex as can be seen in their
income statements at the end of financial year 2014 and the first 9
months of 2015.
Most people who purchase items online have also confirmed that banks
charge them as much as N290 to the dollar even thought the CBN pegs
the rate at around N199.
3. Bureaux de Change (BDC) Operators
They perhaps the biggest benefactors of Nigeria's forex woes. The CBN
in January banned sale of forex to BDC operators accusing them of
buying forex from the CBN at N199 and then selling at the black
market. The CBN also noted that the BDC's buy dollars from the CBN at
N197 only to sell to their customers at N250.
According to the CBN, BDC has risen from a mere 74 in 2005 to 2,786 BDCs today.
4. Exporters Businesses engaged in exports are also huge benefactors
of the declining exchange rate. Revenues from their exports officially
should route through the CBN as export proceeds however it is
understood that some of them move a chunk of that to the black market.
With gains as high as 50% most of them find it hard to resist the lure
of selling their hoard at the black markets rather than at the
official window.
5. Friends and associates of the Central Bank of Nigeria (CBN)
Reports suggests that people close to the management of the CBN or
indeed the government are also befitting from the fall of the Naira.
They get preferential treatment from the CBN by buying at official
rates rather than at the black market rates where a lot of Nigerians
go to.
In a related development, the Naira has continued its unprecedented
freefall in value against the US Dollar. The national currency is now
valued at N352 to USD1 on the parallel market, falling in value from
N347 to the dollar yesterday.
While some market operators did sell at N352 – USD1 yesterday, the
market rate appears to have been in flux between N347 – N352. Our
currency was trading within a range of 352 and 360 a dollar on the
parallel market on Wednesday, February 17, down to a new record low
from a range 347 to 352 on Tuesday due to persistent dollar shortages
amid control by the central bank.
If you want to keep track of the issues and events that will effect
the economy and the strength of the Naira, you can read our updates on
the price of oil and the Naira – US Dollar exchange rate on the
parallel market.
Source:Naij
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