The naira continued its freefall on Thursday, crashing to 280 against the dollar at the parallel market. The naira, which was trading at between 241 and 243 against the greenback about three weeks ago, began a steady fall after the Central Bank of Nigeria stopped sale of foreign exchange to a number of Bureaux De Change Operators due to improper documentation.
Analysts said the development would lead to inflation and affect the profitability of businesses.
The currency had tumbled to 269 against the United States dollar at the parallel market on Wednesday as the Central Bank of Nigeria commenced rationing the greenback to Bureaux De Change operators in its weekly foreign exchange sale.
The dollar was sold for 260 at the parallel market on Tuesday.
The central bank cut the amount it sold to each of the 2,270 BDC operators that participated in Wednesday’s sale to $10,000, down from the $30,000 sold to the operators last Wednesday, the acting President, Association of Bureaux de Change Operators, Aminu Gwadabe, said.
The CBN had offered $84.5m at a similar sale two weeks ago, Reuters reported.
Plunging oil revenues, which account for 90 per cent of Nigeria’s foreign currency earnings and more than half of the Federal Government’s income, have hit public finances and the naira.
Businesses are struggling to access dollars as the CBN rations the greenback to save the foreign reserves.“There is dollar scarcity right now, the central bank has shrunk supplies despite increasing the number of BDCs at its window,” Gwadabe said.
The CBN had a few weeks ago asked all the BDC operators to submit accounts showing their dollar usage at the start of each week before they could access future sales, a move that forex dealers said was aimed at curbing speculation.
On Friday, the CBN issued a circular, which, among other things, invited the BDC operators to also consider obtaining dollars from private sources to fund personal and business travels, its latest attempt to conserve the dwindling reserves.
But it added that individuals wishing to sell more than $10,000 would be required to disclose the source of the funds, tightening the rules around the BDC operations in an economy already suffering from a sharp fall in oil prices since mid-2014.
The nation’s external reserves shed 0.4 per cent in a week to $29.46bn as of December 15, the latest central bank data showed.
At the official interbank market, the currency has been pegged since February and closed at 196.97 on Wednesday.
The BDCs account for less than five per cent of the total dollar trade in Nigeria, but provide an indication of where investors see liquidity and are willing to trade it.