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How dollar price increase in Nigeria over the years

In this article, we are going to discuss the consistent increase in the price of the United States dollar in Nigeria. We will also talk about the factors that are influencing this rise.

The United States dollar to Naira exchange rate has continued to rise at an alarming rate in Nigeria over the past years. This is why the Nigerian Naira has continued to depreciate in its value.

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The rate at which the U.S. Dollar has increased in Nigeria over the years is shocking and there is no sign that the increase will stop anytime soon. Information Guide Nigeria

How dollar price increase in Nigeria over the years

Read Also: How to Own a Dollar account in Nigeria

Why is naira falling against dollar?

There are many obvious factors that are responsible for the continued depreciation of the Naira against dollar. How dollar price increase

One of the major reasons is that Nigeria spends a large chunk of its foreign currencies on importing important items like electronics, refined petrol, wears, and food.

A whopping $47 billion was spent by Nigeria on importation in 2019, $28.7 was spent on invincible things like financial services, medical tourism, professional fees, and business travel.

The continuous demand of the American dollars by Nigerian importers has been the major factor why the Nigerian Naira keeps depreciation while the dollar increases.

Nigerian importers constantly need the dollars to enable them to import goods and pay for services abroad, this has continued to have a negative effect on the Naira.

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The fact that Nigeria does not produce much locally makes the country depend on imports for its survival.

Read Also: Effects of Dollar Rate on Commodity Prices in Nigeria

Between 1999 to 2021, the United States dollar worth has increased in Nigeria by over 500%, this rise is detrimental to the survival of Nigeria’s economy.

However, we should be aware that this did not just happen overnight, there are many factors that contributed to this, this increase in dollar rate may continue as long as these factors are not handled.  We are going to explain these factors in this post, please continue reading carefully.

What was dollar to naira in 1999?

As of 1999, $1 was equal to N21.89, you can see that a lot has changed within 18 years. The factors listed below have continued to prevail thereby consistently influencing the escalation of the dollar rate in Nigeria. How to Own a Dollar account in Nigeria

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What was the rate of dollar to naira in 2006?

Between 1999 and 2006 which marked the beginning of democracy in Nigeria, the Dollar rate had increased by over 100%. In 2006, $1 equaled N128.28.

However, the dollar has witnessed a significant increase in its value between 2015 to 2021 in Nigeria. As of 2015, $1 was N192, it increased to N304 in 2016, N305 in 2017, N306 in 2018, N307 in 2019, N379 in 2020, and is presently valued at N410.45 official market, while the black market value is way over N575.

With the way things are going, many people have been making predictions that the Dollar may soon reach N1,000. This prediction has made lots of savers and speculators store up dollars instead of Naira. Medical Benefits of CBD Flower

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What is the reason for the increase in dollar rate?

The COVID-19 pandemic has also played a role in the alarming increase in the dollar rate. This is because many investors are rushing to have it and use it for transactions. The United States dollars are dominating more than 60% of foreign bank reserves. Npower recruitment

The Nigerian economy majorly depends on oil to survive and this is why the economic situation in the country gets crippled each time the price of oil drops. dollar to naira rate

Another reason why the dollar has continued to increase in Nigeria is the rate at which the dollar is being used by Nigerians in things like travelling, payment of their children’s school fees abroad, and obtaining medical services abroad.

One may be compelled to ask why the United States dollar has continued to rise while the Nigerian Naira keeps depreciating, the answer to this question is not far-fetched.

The fundamental law of demand and supply is at work here and if this does not change, we may see more of the continuous increase in the dollar rate.

Based on the fundamentals of demand and supply, the price of dollar will keep escalating as long as the demand outstrips the supply.  The dollar rate would have been expected to drop if the supply surpasses the demand.

The drastic and continuous drop in oil price has reduced the countries income, while there has been a significant increase in Nigeria’s dependence on foreign services and goods.

According to records, 80% of Nigeria’s export is generally oil, so whenever there is a drop in the price of oil, the country’s revenues go down inevitably.

Currencies are either convertible or nonconvertible, several Third World countries do not have convertible currencies. Sadly, Nigeria is one of these countries whose currencies are not convertible, it is therefore risky for someone to hold such a currency because it may be very challenging to try changing it to another currency.

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Foreign investors calculate their values and business worth in dollars, this is why many of them are careful due to the depreciation of the Naira, the continuous decrease in Naira poses a big risk to investors.  JAMB form

Countries with convertible currencies always have economic growth and political stability. Some of the countries with convertible currencies are, Japanese Yen, Us Dollar, British Pound Sterling, and the Euro, etc. The Chinese Yuan is one of the countries that have partially convertible currency.

When a country has a convertible currency, it gives investors more confidence to invest in that country. The Nigeria Naira is not a convertible currency and this is one of the major reasons it keeps depreciating while dollars keep increasing because of its demand and the reasons stated above. JAMB Result

Check and Confirm: How much is Dollar to Naira today

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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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