Nigeria’s Naira has in the last few days recorded a massive gain against the US dollar at the black market after hitting a record low of N900 per $1 barely a week ago. As of Sunday, Naira was trading at N671 per $1 showing an over N200 or 28 percent rise.
According to several interviews conducted by media outlets in the country, bureau de change traders or black-market operators have attributed the recent rise of the Naira to reduced demand and increased influx of forex into the black market.
Why are prices of local commodities still high?
Interviews conducted by media channels disclose that many traders have insisted that the recent Naira gain doesn’t account for the current stock of goods which were purchased at a higher dollar rate. As such, selling old commodities at the new dollar rate on the black-market results in loss.
- Others claim it would take traders a few more days of Naira stability for them to revert to old prices.
State of play
Analysts at Financial Derivatives Company (FDC) Limited have projected Nigeria’s inflation rate to increase for the ninth consecutive month from 20.77 percent in September to 21.32 percent in October 2022.
- Flood inflation is expected to rise to 23.95 percent from 23.34 percent in September 2022. This would continue the upward trend of food inflation the country has suffered in the last 10 months.
- The flood crisis that engulfed farmlands and submerged livestock, forced the relocation of farmers and resulted in a loss of lives has imposed more high inflationary pressure on Nigeria that is still battling increase in prices of fertilizer, food storage crises, etc.
The big picture
In light of these economic challenges, the World Poverty Clock of the Brookings Institute has classified over 105 million Nigerians to be living in extreme poverty.
- In addition, the World Bank estimates that heightened inflation would further push an additional one million Nigerians into poverty by the end of the year, “on top of the six million Nigerians that were already predicted to fall into poverty this year.”