Economics

Dollar to Naira black market rate hits 610 as political “PR” fuels dollar frenzy

Dollar Rain is now in vogue

Dollar to Naira black market rate hits 610 as political “PR” drives dollar demand

The Dollar to Naira black market exchange rate has hit a record of N610 to $1 and rising. This latest exchange rate further widens the gap between the black market rate and CBN official rate of N415.

Before now, the Naira had been steady in the range of 560-570, and there seemed to be some predictability in the Dollar to Naira black market exchange rate. But in the last few weeks, and since the start of the party conventions for the presidential nominations, there has been a dollar rain and the Naira is taken a beating.

The Naira and dollar both operate under the fundamental truism of the power of supply and demand. Prices jump when demand rises. The latest Naira slide can be attributed to a number of reasons:

Presidential Politics: show us the dollars

It is the season of conventions of the major political parties in Nigeria to select their presidential flag bearers.

Roman Oseghale, economic analyst and Head Consultant/CEO of IntelServe Inc. said the reason for the Naira nosedive is obvious. “It’s election time and the dollar is politicians’ most convenient and most desirable currency. Coupled with other micro and economic pressures, this political dollar  appetite will continue to drive up demand and weaken the Naira in the short and medium term.”

It is the season of conventions of the major political parties in Nigeria to select their presidential flag bearers.

Roman Oseghale, economic analyst and Head Consultant/CEO of IntelServe Inc. said the reason for the Naira nosedive is obvious. “It’s election time and the dollar is politicians’ most convenient and most desirable currency. Coupled with other micro and economic pressures, this political dollar appetite will continue to drive up demand and weaken the Naira in the short and medium term.”

At the recent PDP convention, the Daily Nigerian and several other sources reported that delegates to the presidential convention each went away with at least $35,000 each from the two frontline presidential aspirants, Atiku Abubakar and Nyesom Wike.

There were at least 14 presidential aspirants jostling for the party’s ticket on Saturday in Abuja.

At the PDP convention, dollars speak louder than words.

Mohammed Hayatu-Deen speaks

It was probably because of this dollar power that compelled some reputable names to drop out of the race, including Peter Obi and one of Nigeria’s brightest stars, Mohammed Hayatu-Deen

The former Managing Director of FSB International Bank, announced his withdrawal from the race stating that: “During my recent nationwide trips, I came face to face with angry and hungry youths, children, boys and girls abandoned by their states who ought to provide them with education and vocational training.

These had become the recruiting grounds of criminals, religious and political extremists.

“I planned to ensure that the great potential that had become the hallmark of Nigeria’s development paradigm, should be actualized during our presidency. We planned to make Nigeria the continental economic powerhouse which would guarantee high quality of life to the vast majority of our citizens. “I planned to provide peace by ending insurgency of all types occasioned by the absence of a robust and coherent plan and lack of engagements with those involved and by improving the capacity of our intelligence services, the armed forces, the police and paramilitary services.

“My exposure locally and internationally and contributions to the nation’s economic and political-well being positioned me to take up the challenges facing our dear nation and – the courage to participate in this grueling exercise which most of our elites have shunned away from. Regrettably, the political system has proved to be acrimonious, corrupt and self-serving.

“It is therefore based on personal principles and with great humility that I have decided after wide consultations to withdraw from this contest which has been obscenely monetized.”

Which way Naira, dollar and politics? Tinubu, Amaechi, Osinbajo warm up 

Other reasons for the sudden Naira fall and steady dollar rise include the following:

  • Drop in Nigeria’s Foreign Reserve.
  • CBN’s challenge in meeting the demand from businesses and importers.
  • The astronomical rise in international oil price, which is now approaching $120 per barrel.
  • Fuel subsidy pressure.
  • Import over dependency.

Mr Chidi Okoro, the Chief Transformation Officer of HealthPlus and a faculty member of the Lagos Business School, attributed the dollar frenzy to “street’ sentiments, apprehension and horse-trading. But the biggest factor for the latest Naira slide is the upcoming elections and the party primaries.”

With APC confirming 23 presidential hopefuls in their June 6th primaries, dollar sellers are also warming up for another profitable run. The trending monetized era, is certainly giving PR a bad name.

The love for the dollar seems to be the beginning of the wisdom of Nigeria’s political class.

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