Dollar to Naira Rate 2020 – 2020 Exchange Rate Update. The current Dollar to Naira rate is high. But feel free to read this article to know how much is the Dollar to Naira presently.
The (USD) dollar to Nigerian Naira exchange rate today varies between the CBN exchange rate and the parallel market (black market) exchange rate. Going by the CBN exchange rate is pegged at, 1 USD = N380 But coming to a parallel market (Black market), it’s a different story entirely as stated below.
1 Dollar(USD) to Naira(N) Exchange Rate Today In Black Market
As prescribed above, the dollar to the naira exchange rate in the black market is not pegged as CBN rate, as such, it fluctuates daily.
Dollar to Naira Rate 2020 – Factors Affecting Dollar to Naira Rate
RATES OF INFLATION: Changes in market inflation cause changes in currency exchange rates. A country with a lower inflation rate than another’s will see an appreciation in the value of its currency.
The prices of goods and services increase at a slower rate where inflation is low. A country with a consistently lower inflation rate exhibits a rising currency value while a country with higher inflation typically sees depreciation in its currency and is usually accompanied by higher interest rates
RECESSION: When a country experiences a recession, its interest rates are likely to fall, decreasing its chances to acquire foreign capital. As a result, its currency weakens in comparison to that of other countries, therefore lowering the exchange rate.
INTEREST RATES: Changes in interest rate seriously affects the value of currency and dollar exchange rate. Forex rates, interest rates, and inflation are all correlated.
The reason for this is that any increase in interest rates cause a country’s currency to appreciate because higher interest rates provide higher rates to lenders, and so attracting more foreign capital, which results in a rise in exchange rates
COUNTRY’S CURRENT ACCOUNT / BALANCE OF PAYMENTS: Every country’s present/current account reflects the balance of trade and earnings on foreign investment. It consists of a total number of transactions including its imports, exports,debt, etc.
A deficit in the current account due to spending more of its currency on importing products than it is earning through the sale of exports causes depreciation. The balance of payments fluctuates the exchange rate of its domestic currency.
GOVERNMENT DEBT: Government debt is public debt or national debt owed by the central government. A country with government debt is less likely to acquire foreign capital, leading to inflation. Foreign investors will sell their bonds in the open market if the market predicts government debt within a certain country. As a result, a decrease in the value of its exchange rate will follow.
TERMS OF TRADE: Related to current accounts and balance of payments, the terms of trade are the ratio of export prices to import prices. A country’s terms of trade improve if its export prices rise at a greater rate than its import prices. This results in higher revenue, which causes a higher demand for the country’s currency and an increase in its currency’s value. This results in an appreciation of the exchange rate.
POLITICAL STABILITY & PERFORMANCE: A country’s political state and economic performance can affect its currency strength. A country with less risk for political turmoil is more attractive to foreign investors, as a result, drawing investment away from other countries with more political and economic stability.
An increase in foreign capital, in turn, leads to an appreciation in the value of its domestic currency. A country with sound financial and trade policy does not give any room for uncertainty in the value of its currency. But, a country prone to political confusion may see depreciation in exchange rates.
SPECULATION: If a country’s currency value is expected to rise, investors will demand more of that currency in order to make a profit in the near future. As a result, the value of the currency will rise due to the increase in demand. With this increase in currency, value comes a rise in the exchange rate as well.
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