People in Nigeria are holding cryptocurrencies as the local Naira currency’s struggles against the dollar have persisted in 2022.
The Naira is trading at 414.90N to the dollar based on data from data platform, Trading Economics as of this writing. However, according to on the ground interviews by Bloomberg, the Naira was trading at 670 to the dollar, one day ago, on the black market.
Moreover, Aminu Gwadabe, President of the Association of Bureau de Change Operators of Nigeria, has indicated that people are turning to cryptocurrencies saying:
“The USD rate on the crypto floor is used in determining the value of the local currency.”
– President, Association of Bureau de Change Operators, Nigeria
It was also established that the dollar was quoted at 687.6 Naira on Binance Exchange, with many Nigerians continuing to use P2P exchanges despite an apparent ban on cryptocurrencies.
Based on the chart above, you can see that for the last one year, the Naira has been around 400 to the dollar, with the lowest point in that period being the 409.69 in November 23, 2021.
The official rate is said to be ‘tightly managed by the Central Bank of Nigeria’ as opposed to local FX dealers where the price comes from demand and supply – this is what is usually referred to as the black market, and is not illegal.
Moreover, recent reports indicated that individuals and businesses are finding it difficult to buy dollars at the banks and are resorting to the black market.
The national government has also been accused of rationing dollars given dwindling income from oil exports.
In one of our recent articles, you can see that the issue of dollar shortage was not just felt in Nigeria but also in countries such as Kenya and Ghana, amidst increasing inflation across the continent.
