Nigerians who took a cue from the N565/$1 that the exchange rate traded at the parallel market on the 31st December 2021 and saved in dollars would have earned a significant profit in naira as the exchange rate depreciated to N720/$1 at the time of this report. This set of Nigerians include those with savings in cryptocurrency wallets, dollar investments, domiciliary accounts, trading apps, etc.
A report by the Central Bank of Nigeria (CBN) had disclosed that as of December 2021, Nigerians had deposited a whopping $20 billion into domiciliary accounts of Nigerian local banks. Corresponding reports by crypto exchanges and platforms operating in Africa, including Paxful and Bitget named Nigeria as one of the top markets on the continent.
This implies that since the start of the trend of the rapid depreciation of naira, Nigerians have taken a bet against the local currency, showing a distrust in the ability of the federal government to save the currency.
By the numbers
Converting the $20 billion in domiciliary accounts of Nigerian local banks at the CBN’s official exchange rates would yield N8.5 trillion and N11.3 trillion in parallel markets at the start of the year. With the further depreciation of $720/$1, it would be worth N14.4 trillion.
- Furthermore, converting $10,000 to naira in January 2022 would have amounted to N5.65 million, but as of the time of this report, it would be N7.2 million.
What they are saying
The President of the Association of Bureau de Change Operators of Nigeria, Aminu Gwadabe, disclosed that more Nigerians were buying cryptocurrencies, as they have lost faith in naira. He stated that people were buying dollars to purchase digital assets as surety.
What you should know
- Other country’s economies were also performing poorly against the dollar.
- Kenya, East Africa’s largest economy, hit a record low in 5years of $1 to 118.95 Kenyan shillings at the time of this report.
- The Ghanaian Cedi is also performing poorly against the US dollar as it fell by over 37% trading at $1 to 8.47 GHS.
- South Africa’s rand also fell to $1 to 16.52 ZAR.