Nigerian naira plunges to new lows on the parallel market

The Nigerian naira plunged to new lows on the parallel market, as dwindling reserves and dollar inflows have made it difficult for the Central Bank of Nigeria to fund corporate and individual demand for the greenback.

The local currency weakened to 1,030 naira per dollar on Wednesday from 1,015 the previous day, according to Abubakar Mohammed, chief executive officer of Forward Marketing Bureau de Change Ltd., which compiles data on the informal market in Lagos, the commercial capital.

The rate has diverged further from the official rate, which was cited at 765.8 a dollar on the FMDQ OTC trading platform. That showed further pressure remained to devalue after Africa’s most populous nation allowed its currency to trade more freely in June as part of reforms to help attract more foreign investment and boost the economy.

Capital inflows into the West African nation dropped 33% from a year ago to $1 billion in the three months through June, according to the statistics agency, as investors fret over capital controls and a weak economy. External reserves fell to two-year low of $33.2 billion, central bank’s data shows.

“People are looking for dollars, both the seller and the buyer,” said Umar Salisu, a foreign-exchange operator in Lagos. “Until there’s enough supply, you can’t predict the exchange rate.”