The naira fell to a record low of N426.26/$1 on the Investors and Exporters’ (I&E) window, also known as Nafex, in Lagos, yesterday, after traders adjusted prices to reflect the rate the Central Bank of Nigeria (CBN) sold the local currency amid a lack of dollar supply in the authorised foreign-exchange market, according to Bloomberg. Pressure on foreign reserves, which is down 3.4 per cent since the beginning of the year, despite higher oil prices in Africa’s largest crude producer, has forced CBN to cut down on dollar sales, creating scarcity of the greenback on the market.
The apex bank did not sell dollars to foreign portfolio investors last week, making many local buyers to source their own foreign-exchange from alternative sources, local investment bank, Chapel Hill Denham, said in an investment note Monday. “While we are yet to understand the reason behind this, we believe the persisting declines in FX reserves might have triggered CBN’s restraint to supply FX last week,” it said. The dollar scarcity is creating a black market boom, where naira is exchanging at a record low of N615 per dollar, giving a spread of 44 per cent on the official rate.