Constant dollars

Nigerians Run As Naira Falls, Bitcoin Trade Sees 258% Surge

The Naira to Dollar exchange rate which is merged with huge volatility, with the Naira currently at N720 per $1 in the parallel market, has caused panic among Nigerians.

Recall that the CBN has threatened to sue anyone caught buying the dollar in one of the country’s financial institutions. This, however, has forced many Nigerians to move into the crypto space amassing dollar-dominated digital assets as a hedge against the local currency (Naira) collapse.

Stablecoins and Bitcoins are said to be the most purchased digital assets, causing the local fiat currency (Naira) to plunge to an all-time low in the black market. According to recent data, Nigerians have traded over $5 million worth of Bitcoin on the popular P2P trading website. Pax’s full and local bitcoins saw a 258% increase from last week.

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A large percentage of Nigerians have nevertheless gone against the CBN Act as they constantly trade digital currency in the peer-to-peer market where transactions are charged in dollars. Recall that Apex Bank has warned other banks to refrain from helping cryptocurrency transactions.

The CBN had revealed in 2017 that digital currencies such as Bitcoins, Litecoin and others are widely used to finance terrorism and money laundering, given the anonymity of virtual transactions.

Unhappy with the CBN law on cryptocurrency trading, a large percentage of citizens argued that the CBN creates money out of thin air because the currency is not backed by tangible assets.

They further claimed that the CBN manipulates the money supply to create inflationary pressures and asset bubbles in the economy. Others see it as a way for the CBN to exercise control over economic and fiscal policy.

Despite CBN restrictions on crypto trading in the country, in the first three months of the year 2022, Nigerians traded at least 77.75 billion naira ($18 million) worth of bitcoin. which recorded a 5.71% increase from the 73.54 billion naira worth of bitcoins that was traded in 2021.

Nigeria would be the most traded country in 2021, with 16,000 daily trades, ranking sixth among the world’s leading nations in terms of crypto adoption. As Nigerians continue to pile into cryptocurrencies due to low confidence in the Naira due to constant devaluation. It has been reported that the accumulation of cryptocurrencies is being used as a hedge against the weakening naira.

People buy dollars to buy digital assets because the rate of buying USD in the crypto market moves at the same local rate. Binance, a trading platform, revealed that Nigerians have been transacting a lot of digital currencies over the past few days.

Analysts have blamed the continued devaluation of the naira on rising import bills, dollar savings and the accumulation of digital assets by Nigerians. With the naira continuing to fall, the Senate has decided to invite CBN Governor Mr. Godwin Emefiele to appear before the Senate Plenary to address lawmakers behind closed doors, regarding the continuing fall of the naira. naira in recent weeks.