The Naira fell to its lowest level against the dollar in three years on the black market on Tuesday, traders said, a day after a historic oil price rout pushed U.S. crude futures below zero.
The naira touched 420 per dollar on the black market, for the first time since February 2017, 14% weaker than the official market rate.
The currency has been hitting new lows on the over-the-counter spot and black markets on thin volumes since last month after the central bank adjusted the naira’s official rate, implying a 15% devaluation. It was quoted at a low of 388.92 on the spot market on Tuesday.
A lockdown of Nigeria’s main cities this month to stop the spread of the coronavirus has slowed activities in the economy and the currency market particularly with the central bank running scanty operations and traders working from home. A crash in oil prices will also hurt the oil-producing country.
“It’s all about the corona pandemic and until the lockdown is lifted, we don’t expect improvement in liquidity,” one trader said.
Nigeria has reported 665 cases of the coronavirus and 22 deaths, the country’s Centre for Disease Control said on Monday.
The naira also weakened on the forward market. One-year dollar/naira non-deliverable forwards stood at 498.5 points, weakening from Monday’s close of 492.4, Refinitiv data showed.
Dollar demand has been swelling and piling up pressure on the naira, traders said. Importers with past due obligation are scrambling for hard currency while providers of foreign exchange such as offshore investors have exited.