The downward slide of the naira in the parallel market appears not to end anytime soon, as the slump in crude oil prices, and pressure on the foreign exchange market continues.
The local currency dropped to N425 to a dollar, its lowest level in the parallel market since 2017, according to information gotten from Aboki fx.
This indicates a depreciation of about 1.2%, when compared to the N420 per dollar that it sold for on Tuesday, April 21, 2020.
It is also coming against the backdrop of the slump of Bonny light crude price to just over $14 per barrel, and the selling of Brent crude at less than $20 per barrel on Tuesday.
The naira has been hitting new lows in the parallel market and over the counter spots on declining volume, due to low dollar inflow. The naira was quoted at a low of N388.92 to a dollar in the spot market on Tuesday.
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The further crash of crude oil prices globally, as a result of low demand and storage issues, has put further pressure on the already strained foreign exchange market.
It was also reported that the naira weakened in the forward market, as the one-year dollar/naira non-deliverable forwards were 498.5 points on Tuesday, as against 492.4 on Monday.
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The increased demand for US dollar is caused by importers with past-due obligations scrambling for hard currency and speculators who are buying to hedge against the future, while providers of foreign exchange, like foreign investors and the ones from foreign remittances, have either exited or declined drastically as a result of the global lockdown.
This is compounded by the suspension of dollar sales to Bureau de Change operators.