How does the black market affect the exchange rate of Naira?

3 answers

• Healthy Fresh FoodSep 21, 2024 · a year ago
  The black market has a significant impact on the exchange rate of Naira. Due to the illegal nature of black market transactions, the exchange rate in the black market is often higher than the official rate set by the government. This is because the demand for foreign currency in the black market exceeds the supply, leading to an increase in its price. As a result, the value of Naira in the black market depreciates compared to other currencies. The black market exchange rate serves as an indicator of the true value of Naira, reflecting the underlying economic conditions and the level of confidence in the country's financial system.
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• Ind AliJul 08, 2023 · 2 years ago
  The black market affects the exchange rate of Naira by creating a parallel market where individuals and businesses can obtain foreign currency outside of the official channels. This can lead to a divergence between the official exchange rate and the black market rate. The existence of a black market for Naira indicates a lack of confidence in the country's monetary policies and can result in capital flight, as individuals and businesses seek to protect their wealth by converting it into more stable currencies. The black market also creates opportunities for arbitrage, where individuals can buy foreign currency at a lower rate in the official market and sell it at a higher rate in the black market, further exacerbating the exchange rate volatility.
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• Trương Thùy TrangJul 03, 2021 · 4 years ago
  At BYDFi, we understand the impact of the black market on the exchange rate of Naira. The existence of a black market can create challenges for individuals and businesses looking to engage in legitimate foreign currency transactions. It is important for regulators and policymakers to address the underlying issues that contribute to the growth of the black market, such as corruption, economic instability, and lack of transparency. By promoting a more transparent and efficient foreign exchange market, we can help reduce the reliance on the black market and stabilize the exchange rate of Naira.
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