Naira Hits New Low on Black Market as Dollar Scarcity Worsens

  • Exchange rate projected to reach 400 per dollar by Friday
  • Panic buying weakening currency amid dollar scarcity

Nigeria’s naira extended its fall to a record low on the black market as demand for the U.S. currency increased amid a plunge in crude oil prices and foreign exchange restrictions by the Central Bank of Nigeria.

The local unit fell to 390 per dollar in Lagos, the commercial capital, from 375 on Wednesday, Aminu Gwadabe, president of Lagos-based Association of Bureau de Change Operators of Nigeria, said by phone. The naira may fall to 400 per dollar by Friday, he said.

“As the currency drops in value, more people engage in panic buying,” Gwadabe said. “There are importers looking for dollars at all costs to keep their businesses going.”

Nigeria’s central bank stopped selling foreign exchange to money changers last month, the latest in a series of controls aimed at supporting the naira at a fixed peg of 197-199 per dollar on the official interbank market since March last year amid plunging oil prices.

Africa’s biggest oil producer has restricted foreign currency trading at banks, causing a shortage of dollars in an economy that imports most of its manufactured goods, sending the unofficial rate soaring. Crude sales accounted for about two-thirds of government revenue in 2014 and about 90 percent of the nation’s foreign currency earnings.

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