What is the parallel market?
The parallel market is an unofficial market for foreign exchange that operates outside of the official banking system. It is also known as the black market or the informal market. In Nigeria, the parallel market is a major source of foreign currency for businesses and individuals who cannot access the official market.
Why is the parallel market growing rapidly in Nigeria?
There are several reasons why the parallel market is growing rapidly in Nigeria.
- The official exchange rate is overvalued. The official exchange rate is set by the Central Bank of Nigeria (CBN), and it is often overvalued compared to the market rate. This means that businesses and individuals can get a better rate of exchange by using the parallel market.
- There is a lack of liquidity in the official market. The official market is often illiquid, which means that there is not enough foreign currency available to meet demand. This can make it difficult for businesses and individuals to get the foreign currency they need.
- The CBN has imposed restrictions on the official market. The CBN has imposed a number of restrictions on the official market in an attempt to curb the demand for foreign currency. These restrictions have made it more difficult for businesses and individuals to access foreign currency through the official market.
What are the risks of using the parallel market?
There are several risks associated with using the parallel market.
- The exchange rate is volatile. The exchange rate in the parallel market can be volatile, and it can change rapidly. This can make it difficult to predict how much foreign currency you will get for your naira.
- There is no regulation. The parallel market is not regulated by the CBN, which means that there is no guarantee that you will get a fair exchange rate. You may also be exposed to fraud or other criminal activity.
- You could be arrested. Using the parallel market is illegal in Nigeria, and you could be arrested if you are caught.
Is it worth using the parallel market?
The decision of whether or not to use the parallel market is a personal one. There are both risks and benefits to using the parallel market, and you should weigh these factors carefully before making a decision.
If you do decide to use the parallel market, it is important to be aware of the risks involved. You should also take steps to protect yourself from fraud and other criminal activity.
The AI has provided us with the news.
I’ve asked Google Gemini the following question, and here’s its response.
Please search for “parallel market” which is rapidly rising on Google Trends NG and explain in detail. Answers should be in English.
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