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KPMG Nigeria Forecasts FX Rate Range of N650/$ to N750/$ After Currency Floatation

KPMG Nigeria has projected that the foreign exchange (FX) rate in the country will range between N650/$ to N750/$ following the recent floatation of the currency.

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KPMG

KPMG Nigeria, a leading professional service company, has projected that the foreign exchange (FX) rate in the country will range between N650/$ to N750/$ following the recent floatation of the currency.

KPMG’s forecast, shared in their flash notes published on June 15, 2023, sheds light on the potential outcomes of this bold move.

KPMG Nigeria emphasized the importance of implementing supporting policies that encourage and guarantee a steady supply of FX in order to achieve relative equilibrium in the FX market.

The company highlighted the need for proper decentralization of the FX supply environment, with the Central Bank of Nigeria (CBN) still acting as the primary supplier of FX.

“We estimate that the FX rate will range within N650 to 750/$ in the near term. Relative equilibrium will depend on how quickly supporting policies are introduced that encourage and guarantee FX supply,” stated KPMG.

By taking the bold decision to float the currency, the gap between the official and parallel markets is expected to narrow over time. KPMG Nigeria highlighted the potential reduction in arbitrage opportunities and the discouragement of round-tripping, which would foster increased confidence in the Nigerian economic environment.

“By collapsing all its official multiple FX windows into its I & E window and granting commercial banks and dealers in the forex market the authority to sell forex freely, the government has initiated the first of several steps it needs to take to unify the FX rates,” explained KPMG.

The immediate reaction to the currency floatation was evident, as the official I & E window witnessed a significant jump, closing at N664/$ on the day of the announcement compared to N473/$ the day before.

“The eventual anticipated convergence of the FX rates will also immediately improve much-needed government FX-related revenue, which helps to slow the pace of debt accretion and improve expenditure on physical and social infrastructure,” added KPMG Nigeria.

KPMG Nigeria also highlighted the potential unintended consequences of these actions. A reduction in value-added tax (VAT) and companies’ income tax may occur if consumption expenditure shrinks, leading to a decline in corporate earnings. Businesses may also face increased costs due to unexpected FX losses resulting from dealing with higher rates during the financial year.

“To avoid any reversals to gains experienced in the last few weeks, sustain the positive momentum and atmosphere of cautious optimism currently being witnessed, it is important that clarity, especially relating to the remaining FX and monetary policy supporting structures, are worked out,” cautioned KPMG Nigeria.

Additionally, KPMG recommended that the government introduces erstwhile promised inflation support measures post-PMS subsidy removal to minimize disruptions in consumer demand and business earnings. They suggested short to medium-term income tax, value-added tax, and corporate tax reliefs, as well as non-cash-based incentives that would be less inflationary.

“The government should lead by example also by reviewing and cutting out wasteful expenditure just as it advocates for the public to bear the short-term pains from needed restructuring and reform,” urged KPMG Nigeria.

While KPMG acknowledged the short-term challenges that may arise, they believe that the combined impact of these key monetary and fiscal policy decisions will be positive, especially in the long term.

The projected FX rate range of N650/$ to N750/$ following the currency floatation indicates a new era for Nigeria’s economy. With careful implementation of supporting policies and a focus on sustainable growth, the country has the potential to attract investments and achieve greater economic stability.

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Naira

Black Market Dollar to Naira Exchange Rate Today 14th May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 14th, 2024 stood at 1 USD to ₦1,520.

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New Naira Notes

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 14th, 2024 stood at 1 USD to ₦1,520.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,500 and sold it at ₦1,480 on Monday, May 13th, 2024.

This indicates a decline in the Naira exchange rate compared to the current rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,500
  • Selling Rate: ₦1,480

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

Continue Reading

Naira

Black Market Dollar to Naira Exchange Rate Today 13th May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 13th, 2024 stood at 1 USD to ₦1,500.

Published

on

naira

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 13th, 2024 stood at 1 USD to ₦1,500.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,470 and sold it at ₦1,460 on Friday, May 10th, 2024.

This indicates a decline in the Naira exchange rate compared to the current rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,500
  • Selling Rate: ₦1,480

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

Continue Reading

Forex

Zimbabwe Implements Strict Rules: $14,782 Fine for Violating Official Exchange Rate

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Zimbabwe, in a bid to stabilize its currency and clamp down on black-market trading, has introduced stringent regulations to penalize individuals and companies found violating the official exchange rate of its new currency, the ZiG.

Under the new rules announced by Finance Minister Mthuli Ncube, offenders will face a hefty fine of 200,000 ZiG or $14,782.

The move comes as the government seeks to enforce the sole use of the official exchange rate, which is determined daily by the Reserve Bank of Zimbabwe.

The decision to impose such a significant penalty underscores the seriousness with which Zimbabwean authorities are approaching the issue of currency stability.

By cracking down on those who flout the official exchange rate, the government aims to curb the proliferation of parallel markets and ensure the orderly functioning of the economy.

Previously, retailers were required to price their goods within 10% of the official exchange rate to prevent excessive profiteering.

However, this regulation has now been scrapped as it was deemed ineffective in curbing informal trading and maintaining the value of the currency.

The ZiG, introduced on April 5 as a successor to the Zimbabwean dollar, represents the country’s sixth attempt to establish a stable local currency.

Backed by 2.5 tons of gold and approximately $100 million in foreign currency reserves held by the central bank, the ZiG is intended to restore confidence in the nation’s monetary system.

Despite these efforts, the ZiG has faced challenges since its launch, including fluctuations in its value against major currencies.

Trading at 13.53 to the dollar as of Thursday, the currency experienced a record low of 13.67 to the dollar earlier in the week, highlighting the volatility inherent in Zimbabwe’s currency market.

The introduction of strict penalties for violating the official exchange rate reflects Zimbabwe’s determination to maintain control over its currency and stabilize its economy.

However, it remains to be seen how effective these measures will be in addressing the underlying issues contributing to currency instability and informal trading in the country.

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