Naira declines by 1.10% to N367 per dollar at the parallel market.
The Nigeria stock market also closes negative with NSE ASI losing 3.35% to close at 23,572.75pts.
Analysts express worry that the plunge in global oil prices may pressure the Nigerian government to devalue the naira.
Nigerian naira exchanged between N405 and N420 to a dollar in the Bureau De Change segment of the market due to uncertainty over oil price and coronavirus outbreak.
The President, Association of Bureaux De Change Operators of Nigeria, Aminu Gwadabe, said the crude oil price which fell drastically in the international market to as low as $35 per barrel, raised speculations among the BDC operators and Nigerians in general.
He said this caused speculations in the market which were not necessary.
Gwadabe said, “With the fall in oil crude oil prices on Monday, we witnessed a lot of foreign investors portfolio dropping their assets, most especially to convert to cash.
“The movement was as a result of recklessness on the side of the operators, when they want to speculate, but there is no reason for such because the Central Bank of Nigeria had continued to maintain support for liquidity to the BDC sub-sector.”
While noting that the dollar sold for as high as N400, he said sanity was gradually returning to the sector as it sold for N375 by the close of the day.
According to him, the CBN had maintained stability at N360 in more than three years.
He said in its meeting with the CBN on Thursday, the regulator warned the BDCs against contraventions.
The ABCON president disclosed that the CBN wanted to revoke the licences of some BDCs for various infractions but fined over 100 BDCs over N5m for various offences.
Another BDC operator who spoke with our correspondent said, “When we woke up on Monday, the exchange was still about N360, but all of a sudden, because of the fall in crude oil price, people were panicky.
“Today, we still sold for up to N420 but the price was fluctuating.”
It also declined by 0.63% to close at N478 against the Pound and 1.74% to close at N410 against Euro
The drop was the first major one since the Central Bank of Nigeria (CBN) introduced measures to ensure stability at the foreign exchange markets.
Some of the measures include the introduction of multiple fx regimes in the country and frequent interventions.
For years, it has stabled at N360 – N363 at the parallel market and N306 at the official market side. On the Investors & Exporters Foreign Exchange Window (IEFX), the Naira gained 0.37% to N368 per dollar.
It stayed stable at the highly official pegged price at N306.95 per dollar.
On Tuesday, the Nigerian stock exchange lost the most in almost a decade as sell-off persists. The Stock’s All Share Index declined by 4.9%.
At today’s trade, market further closed negative with NSE ASI losing 3.35% to close at 23,572.75pts. Today’s performances were mainly due to the losses recorded in NESTLE (-10.00%), DANGCEM (-10.00%), STERLNBANK (-9.93%), CONOIL (-9.88%) and UCAP (-9.83%) which offset the gains recorded in CHAMS (+10.00%), COURTVILLE (+10.00%), FCMB (+9.93%), UNILEVER (+9.91%) and UBA (+9.73%).
Analysts have expressed worry that the plunge in global oil prices may pressure the Nigerian government to devalue the naira. The oil-price war will take a toll on Nigeria’s export earnings and depletes foreign exchange reserves of Africa’s biggest economy.
The CBN also expressed its displeasure on the issue in a statement, saying the speculative activities of unscrupulous players in the foreign exchange market was borne out of the impression that the CBN was on the verge of devaluing the Naira, and triggering panic in the FX Market.
“These rumours are false, unwarranted and calculated to serve their dubious and selfish ends,” it stated.
It added, “We have begun a robust and coordinated investigation in collaboration with the Nigerian Financial Intelligence Unit and related agencies to uncover the unscrupulous persons and FX dealers who are creating this panic, and the full weight of our rules and regulations will be meted out to them, including, but not limited to, being charged for economic sabotage.”