The naira on Monday fell by 1.09 percent to N460 on the parallel market. The naira decline followed President Muhammadu‘s directive to the Central Bank of Nigeria (CBN) to stop dollar sales for food and fertilizer imports.
On the official market supported by the CBN, the naira traded at N381 to the dollar, while it was quoted at N385.83 naira on the spot market yesterday.
Buhari last Thursday directed the CBN to stop selling foreign exchange for those imports, similar to an order issued last year.
Nigeria faces its worst economic crisis in four decades triggered by an oil price crash induced by the novel coronavirus pandemic. The crisis has slashed government revenue, weakened the currency, and created a large financing gap for the economy.
A trader attributed the high dollar demand in the parallel market to importers who have to make payments to bring in goods for end-of-year sales.
The naira had firmed sharply two weeks ago on the parallel market after the CBN resumed dollar sales to individuals and investors to clear their demand.
But sales have not been enough, traders say, with pressure piling up on the currency. Nigeria has spent 16.6 percent of its dollar reserve from last year to $35.77 billion.
Dollar liquidity dried up on the spot market after foreign investors dumped Nigerian assets following the oil price crash. However, CBN’s forex sales have also been inadequate.