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Naira Plunges to N260 to $1 in Worst-ever Fall in History of Nigeria

Kayode Sesan

The naira weakened to a record fall in unregulated trading on Friday as money changers said the Central Bank of Nigeria reduced the amount of dollars it made available to them.

Crude oil price yesterday fell below the 2016 budget benchmark of $38 per barrel as submitted to the National Assembly by the Federal Government last week. Brent crude oil prices fell to seven-year lows, as the naira sank to N260 to a dollar at the black markets, the worst-ever fall in history. This is coming ahead of a widely-anticipated U.S. interest rate increase next week and worries over economic growth.

The downward trend also affected most stock markets worldwide as they tumbled on Friday, Reuters reported that all three major U.S. indexes sank over 1.5 percent, while crude prices plunged amid global oversupply. The International Energy Agency said it sees the oil glut worsening in 2016 as demand slows and OPEC shows no signs of slowing production.

Brent crude was set for its biggest weekly percentage drop in over a year and U.S. crude was set for its biggest percentage decline in roughly a year.

Brent crude LCOc1 was down 4.48 percent at $37.95 a barrel after hitting $37.36, its lowest since December 2008. U.S. crude CLc1 dropped 2.86 percent to $35.71 per barrel after hitting $35.35, its lowest since February 2009.

On Wall Street, the three major stock indexes were on track for their worst weekly drop in a month. The Dow Jones industrial average  was down 1.55 percent, to 17,302.09. The S&P 500 was down 1.67 percent, at 2,018.05. The Nasdaq Composite was off 1.85 percent, at 4,951.92.

Some traders who spoke to the media attributed the fall in value of naira scarcity in the market and tight forex restriction from the Central Bank of Nigeria. Less than half of the registered Bureau de Change accessed forex at the weekly auction on Wednesday from the CBN, a situation that triggered the value of the dollar at the black market.

 

 

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