Black Market Exchange Rate Movement in Nigeria: Does Cryptocurrency Matters?

The movement of exchange rates generally had demonstrated unpredictable patterns over time as a traditional mode of payment, particularly the black or parallel exchange market that is already fueled by demand pressure. However, cryptocurrency and the parallel or black exchange market are global phenomenon traded outside the government strict regulations in Nigeria, hence, their economic implications and understanding by many persons, banks, policy-makers, governments, and companies remain a priori unclear. Therefore, this study investigates the impacts of cryptocurrency on black or parallel exchange rate market  movement in Nigeria from Jan, 2021 to April, 2023 using the autoregressive distributive lag (ARDL) regression analysis and Granger causality test to affirm the hypothesis that, cryptocurrency do not have significant impacts on black market exchange rate movement in Nigeria. The result of the ARDL shows that cryptocurrencies trading are core determinants of the black or parallel market exchange rate movement in Nigeria during the study period. Therefore, we concluded that cryptocurrency has a negative and significant impact on black market exchange rate movement in Nigeria from Jan. 2021 to April, 2023 and recommend that the government as a matter of urgency regulate cryptocurrency in order to curb the excesses that come with it just like in Japan, China, and Australia, since Nigeria still engages foreign currency controls as monetary policy tools, so as to improve on consumers’ confidence on the domestic currency.