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Effects of Dollar Rate on Commodity Prices in Nigeria

This article will explain the effects of the increasing dollars rates on the prices of commodities in Nigeria. If you have been wondering why the prices of commodities are not as you would expect them to be, this article will give you a good insight into why the prices of commodities in Nigeria are affected.

The dollars to naira exchange rate has continued to escalate while the Nigerian naira has gone in the opposite direction. There is no need to deny the fact that prices of imported goods and services have skyrocketed at an alarming rate in the past 1 year as a result of this incessant increase in the dollar rate. Information Guide Nigeria

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These increases have affected the economy of the nation negatively owing to the fact that Nigeria is a country that depends on imported goods and services to survive.

Effects of Dollar Rate on Commodity Prices in Nigeria

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Nigeria is one of the third-world countries that have non-convertible currencies, this is why payments for imported goods can not be made with the Naira.

The Naira is only accepted in Nigeria as a means of payment for goods and services. There is no other country that accepts the naira as a legal tender, this is one huge advantage that the dollar has over the naira, the dollar is accepted in almost all the major countries in the world as a means of payment. Effects of Dollar Rate on Commodity

With the above explanation, you can see that the dollar plays a major role in the Nigerian economy, a strong dollar is bearish for prices of commodities in Nigeria.

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What is making Dollar Rate continue to increase in Nigeria?

There are many factors that are behind the continuous escalating of the U.S. dollars in Nigeria. One of those factors is that the demand for dollars is more than the supply. The fundamental law of demand and supply is what has contributed to the constant increase in the dollar rate in Nigeria. Man City beats Chelsea with a goal from Jesus

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Businessmen and importers use dollars to pay for their imported goods and many other Nigerians also use dollars to pay for services overseas. The constant demand for dollars by Nigerians is one major factor that has contributed to the continuous escalating of dollars.

The idea of Nigeria operating a mono-product economy makes it almost difficult for the country to control its economy, the economy of the country is almost controlled by external factors.

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The fact that Nigeria depends mainly on oil is another reason the Naira keeps depreciating especially when there is a drop in the price of oil. Npower recruitment

The Covid-19 pandemic also contributed hugely to the increasing rate of U.S. dollars, especially in Nigeria. The demand for U.S. dollars has increased globally and the effect of this is mostly felt in Nigeria. Nigeria Law School Bar Part I Course Admission Form 2021

Every Nigerian will agree that the prices of commodities have drastically increased especially in the past year. This article will try to explain how the increasing dollar rate is affecting the prices of these commodities. dollar to naira rate

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How Dollar Rate is Affecting the Prices of Commodities in Nigeria

The increase in the dollar rate affects the prices of commodities in Nigeria in many ways. Prices of imported items like rice have skyrocketed as a result of the increasing rate of the dollar.

If a bag of rice was imported at $50 when a dollar was N300, that would be N15,000. Now that one dollar is about N440, the imported price for the same quantity of rice is N22,000.

The amount for clearing and shipping has also increased as well because most of the clearing and shipping payments are made with dollars. Once the fees for clearing and shipping increase, there is bound to be a corresponding increase in the price of the goods. WAEC result

This is why we have an alarming increase in the prices of commodities in Nigeria, the more dollar keeps increasing, the more the prices of these goods will correspondingly increase.

Secondly, most of the equipment used in manufacturing local commodities are imported, which means that they are being purchased with dollars. Surely, the dealers of these commodities will have to increase the prices of their finished products so it can cover the cost of production which involves the purchase of the equipment. JAMB form

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The increase in dollar rate has also increased the price of transportation, buying a car now is more expensive than it was in the past 2 years. This is because cars are not manufactured in Nigeria, they are imported and as such, any increase in dollar rate in Nigeria means that a buyer will buy the car at a higher rate more than what should have been paid.

Let us say that the person bought the car to use as public transport, after buying the car in an amount that is higher than what he or she expected, his transport fare pricing will surely increase. If this increases, it will affect the price of commodities because the seller of those commodities will increase prices after spending more than usual on transport.

These are a few of the different ways that the dollar rate has affected the prices of commodities in Nigeria. JAMB Result

Check and Confirm: How much is Dollar to Naira today        Pounds to Naira

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Ifiokobong Ibanga

Ifiokobong Ibanga is the founder of InfoGuideNIgeria.com. You can get in touch with him on Instagram @ifiokobong. If you need a personal assistance on this topic, kindly send a message. Much Love!

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