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Nigerian Naira fell to its lowest dollar in three years after historic oil price drop forced the U.S. crude future down to zero. The naira entered the black market for 420 dollars, 14% lower than its official market rate for the first time since February 2017. Since last month after the central bank changed the official rate, which means a 15% devaluation, the currency has been reaching new lower rates in the over-the-counter and black markets in limited amounts. On the spot market on Tuesday, the figure was small at 388.92.
The country has been on lockdown in order to prevent the spread of the coronavirus, with smaller operations running from the central bank and traders from home, having slowed down activity in the economy and the currency market. The oil-exporting country will also suffer a fall in oil prices.
On the forward market, the naira had weakened. Non-deliverable forwards for one-year dollar/naira stood at 498.5
points, weakening from Monday’s closing of 492.4, Refinitiv data showed.
Demand for the dollar has swelled and built-up pressure on the naira. Importers with past due duty are searching for hard currency when foreign-exchange suppliers including offshore investors are out.
U.S. oil futures traded into negative territory for the second day on Tuesday, after diving below zero for the first time ever on Monday, as fears rose that the U.S. would run out of oil storage space as the coronavirus shutdown leads to a supply glut.