Dollar to Naira Exchange Rate, Four years after Nigeria tried and failed to stop its currency from collapsing, Africa’s biggest crude producer is again reacting to this oil crisis the same way it did in the recent past.

It worked out badly then as oil revenues, which account for 90% of foreign-exchange earnings, failed to rebound in time -- leading to a depletion in the central bank’s fire power to defend the naira. It will likely fail again, if the West Africa nation sticks to the same template.

A surge in supply after OPEC failure to agree on production cuts with Russia has combined with reduced demand as the coronavirus pandemic disrupts economies globally. This means crude prices will remain low far longer than the central bank’s dwindling reserves can support the currency, which has weakened the least among major oil producing countries in 2020.

With Nigeria’s naira official exchange rates fixed by the country’s Central Bank, these black market operators often deliver a more accurate verdict on the levels of supply, demand and prices. Over the past two days, naira to dollar exchange rates—which have stayed quite stable at around 360 naira to the dollar since mid-2017—have reached 430 naira. One currency trader tells Quartz Africa dollars are literally no longer available even on the black market due to “excessive demand.”

Much of that demand is down to bureau de change operators hoarding dollars while speculators attempt to hedge against potential naira losses in the event of a devaluation. “Both are happening at the same time but there is a balance tilted towards towards hoarding [by bureau de change operators],” says Manasseh Egedegbe, an Abuja-based investment manager.

With Nigeria’s economy perennially import-dependent, a dollar crunch typically affects a wide range of businesses that require hard currency to fund imports of input materials in a country whose weak industrial base means it makes very little from scratch.

The availability of dollars is also typically a hot button issue among middle class Nigerians, a key demography, who can afford foreign travel, health care or even education—Nigerians spent $514 million to school in the United States in 2018.