The Nigerian naira fell against the dollar as declining outlook for the local unit prompted investors to raise demand for the US currency at the official and black markets.
The naira retreated 0.1 percent to 198.90 per dollar as of 1pm in Lagos, the nation’s commercial capital. It dropped to 231 versus dollar from 230 on Wednesday at the black market, as importers that are excluded by the Central Bank of Nigeria from accessing the official markets for the greenback scamper for it on the streets.
The Central Bank of Nigeria last week listed 41 items, including rice, private jets, foreign securities and Indian incense, which couldn’t be funded in the interbank foreign-currency market or by the use of export proceeds in its bid to conserve external reserves and stabilize the exchange rate. Faced with a 45 percent plunge since last year’s peak in the price of oil, the source of two-thirds of government revenue, the central bank began imposing currency restrictions as pressure mounted on the naira, which has dropped 18 percent against the dollar in the past 12 months.
“While interbank foreign exchange market is somehow stable, naira short- term outlook is weak due to the impact arising from sustained low oil price, low level of foreign exchange reserves and large level of unmet dollar demand,” Kunle Ezun, analyst at Ecobank Transnational, says in e-mailed note today.
Nigeria’s foreign-currency reserves have declined 16 percent this year to $29 billion as of June 30.