The Nigerian fiat currency Naira falls as Nigerians flock to buy cryptocurrencies as a hedge to save assets as Naira weakens, per reports.
Abubakar Mohammed, an operator at the ABCO, states, Naira’s position to be at N670/$1 on Wednesday. As against this, Naira’s price of 424.34 in the official spot market at 9:22 a.m. local Lagos time records a 58% fall below the black market rate.
“More people are buying cryptocurrencies because they are losing confidence in the naira,” says Aminu Gwadabe, president, the Association of Bureau de Change Operators (ABCO) of Nigeria. “The USD rate on the crypto floor is used in determining the value of the local currency,” adds Gwadabe.
The Central Bank of Nigeria had put a ban on banks’ cryptocurrency transaction participation in February 2021. But Nigerian crypto users now use Paxful and LocalBitcoin for cryptocurrency trading in dollars.
As per Paxful P2P exchange, in 2022’s initial 3 months, Nigerians conducted Bitcoin transactions totalling a whopping $185 million.
Binance Global Limited data reveals Nigerians’ 24-hour digital currency trades were $103,691 until 10:36 a.m., per local Lagos time on Wednesday.
As a result, the demand got sent to the black market. The Nigerian Senate president says the policy “contributed to the excessive scarcity of forex in Nigeria.”
Also Read: Nigerian Central Bank Governor says Crypto to Change Financial Sector
But its black market and crypto exchange rates are luring Nigerians. The reasons being the scarcity of Naira and a three-time Naira devaluation since 2020, courtesy of the COVID-19 pandemic. A fallen confidence in Naira motivates Nigerians to opt for cryptocurrencies.
Naira is struggling with its official Nafex (spot rate) and Nigerian Central Bank-led (official exchange rate) exchange rates against the US dollar.
