This paper presents empirical evidence on the determinants of customers' preferences for patronizing banks and black market for foreign exchange transactions in Nigeria. The study utilized a sample size of one hundred and fifty respondents using convenience sampling technique. The respondents' consent were sought verbally and obtained before data collection. A multiple regression analysis was employed to determine the level of significance (p<0.05) of the identified factors affecting customer preferences for foreign exchange transaction in Nigeria. An evaluation of the individual predictors show that the unrestricted value of transaction when foreign exchange hawkers are patronized accounts for the customers’ patronage of this market otherwise called “black market” and the 't' value of 3.598 obtained reinforces this finding. These results have important implication for policy makers especially in view of the government's plan to re-structure and re-position the economy towards stable and sustainable growth. It is therefore recommended that a robust and strategic policy be put in place to regulate the foreign exchange market as a way of strengthening the government's economic intervention programmes.