The Nigerian currency depreciated to its weakest level since February 2017 in the unofficial black market after the country’s central bank cut supply to dealers.

The local unit traded at 415 naira per dollar according to abokiFX.com, which collates rates from street-traders in Lagos. In the official spot market, naira traded 386.51 per dollar as of 4:15pm in Lagos, the highest it has traded in 24 years.

The central bank in Africa’s most populous country announced last week that it was suspending foreign exchange sales to money changers until further notice. A move it said was in line with curtailing the spread of coronavirus in the country.

This was after devaluing the exchange rate used by foreign bond and stock investors, which had been largely pegged since 2017, by about 4% to 380 per dollar. Russia’s ruble is down by 15% and Colombia’s peso by 14% since oil prices plunged and there is an expectation that Nigeria will have to let its currency weaken more.

“The fact of central bank stopping sale of dollars to BDCs to contain the spread of coronavirus caused some scarcity in the market,” chief executive officer of Forward Marketing Communications bureau de change, Abubakar Mohammed said by phone. “People are buying dollars to keep, thinking when things become normal they’ll gain,” he said.

Abuja-based central bank sold more than $12 billion to dollar exchange operators last year.

“Bureau de Change account for 30% of foreign exchange transactions and if supply is not coming from there, even people with dollars will hoard,” Robert Omotunde, analyst at Afrinvest said by phone.

Leading Nigerian banks, such as Zenith Bank Plc and Guaranty Trust have cut how much foreign currency customers can spend abroad due to expected dollar shortage caused by the coronavirus pandemic and the slump in the price of oil, the country’s main export. Renaissance Capital expects other banks to follow.

“The foreign reserve is not at a comfortable level. If the major source of accretion is now pressured, exchange rate will feel the pain and the situation will worsen,” Omotunde said.

Bloomberg