The naira weakened 1.25 per cent to N324 to the dollar on the parallel market yesterday after Emmanuel Ibe Kachukwu, junior Minister for Petroleum yesterday raised petrol prices by 67 per cent, traders said.
“People are holding on to their dollars in anticipation of an increase in demand for dollars by oil importers,” said Aminu Gwadabe, head of the bureaux de change operators association.
On Wednesday, the federal government said fuel importers were from now on allowed to get dollars from the parallel market to help ease acute shortages.
In January, the central bank banned dollar sales to retail bureaux de change and reduced supply at its official interbank forex market in an effort to conserve reserves, now at their lowest level.
Nigeria earns around 90 per cent of its foreign exchange earnings from crude oil exports, but mismanagement of its refineries means it must also import expensive refined fuel, which eats deep into its reserves.
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Before Wednesday when the government increased prices of fuel, Africa’s biggest economy suffered acute shortages of gasoline, causing motorists to queue endlessly for a fill-up.
“We are already seeing demand in excess of $200 million and above coming to the market, from less than $300,000 prior, but there is no supply to meet up with the increase,” Gwadabe said.
The local currency is quoted at N199.40 at the interbank market, near the officially peg rate of N197 to the dollar.
“There is dollar scarcity right now; even at N324 you can’t find dollar to buy,” one trader told Reuters.
Nigeria’s forex reserves have fallen 2.68 per cent in one month to $27.83 billion as of May 10.