Nigeria's overnight lending rates soared to a record high of 100 percent on Tuesday, signalling a sharp tightening of naira supply as the currency fell to 200 to the dollar for the first time.
A weekend decision to postpone presidential elections by six weeks, combined with plummeting oil prices, has damaged investor sentiment towards Nigeria, driving the naira to a succession of lows despite central bank efforts to prop it up.
The central bank said on Tuesday the foreign exchange market was understandably nervous after the decision to postpone elections but said it was nothing to worry about. The bank is committed to sustaining a "stable and orderly" market, it added.
The naira fell sharply to a fresh low of 200 to the dollar, shrugging off central bank intervention and ending at a record closing low of 199.90. It closed at 196.50 on Monday.
he naira has been officially pegged at 160-176 to the dollar after an 8 percent devaluation in November but it has rarely traded within that range, and most analysts reckon authorities will have to devalue the currency again.
Non-deliverable forwards -- contracts used to bet on future exchange rate moves -- price the naira as much as 30 percent weaker in a year's time.
The central bank was widely expected to move after the presidential election, but the decision to postpone it from Feb. 14 till March 28 due to security concerns has rattled investors.
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