What are the factors that affect the exchange rate of naira to dollar in the black market?

1 answers

• Feb 18, 2022 · 3 years ago
  When it comes to the exchange rate of naira to dollar in the black market, there are a few key factors at play. Firstly, the supply and demand for both currencies heavily influence the exchange rate. If there is a high demand for dollars and a limited supply, the naira will weaken against the dollar. On the other hand, if there is less demand for dollars or an increased supply, the naira can strengthen. Secondly, economic factors such as inflation, interest rates, and government policies can also impact the exchange rate. High inflation can erode the value of the naira, while higher interest rates can attract foreign investors and strengthen the currency. Lastly, political stability and market sentiment can also affect the exchange rate. Uncertainty or negative sentiment can lead to a depreciation of the naira, while positive sentiment can have the opposite effect. Overall, the exchange rate in the black market is influenced by a combination of supply and demand, economic factors, and market sentiment.
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