Nigeria’s currency slumped to an all-time low against the U.S. dollar Wednesday, pummeled by the tumbling price of oil, rendering the central bank’s staunch efforts to stem the decline ineffective.
The dollar rose as high as 187 naira in early afternoon, eclipsing a previous record of 186.90 set on Dec. 2. That brings the buck’s year-to-date climb against the naira to 16.8% and its appreciation so far in December to 4.7%.
Even though Nigeria’s government has recently striven to diversify the country’s economy—which in April surpassed South Africa’s to become the continent’s largest—beyond commodities, oil and natural gas still account for around 96% of export revenue and about 80% of government revenue, according to the International Monetary Fund.
On Wednesday, Nigeria’s Finance Minister Ngozi Okonjo-Iweala told reporters she would not reduce the government’s benchmark for its 2015 budget, which assumes crude will trade at $65 per barrel.
Instead, she said, the country would raise taxes on luxury purchases like private jets, and cut foreign travel for government workers.
“We are not putting any extra burden on the ordinary Nigerian,” she said. “Analysts have told us that the oil price may rise to about $68 to $70 per barrel by early 2015.”
By midafternoon Wednesday, Brent crude was trading 1.3% lower than the previous day’s price, at $59.25 per barrel, taking its decline so far this year to 46.3%.
Earlier this month, Nigeria’s finance ministry trimmed its budgeted Brent crude oil forecast to $65 per barrel from $73. The country’s central bank has also raised interest rates and repeatedly intervened in currency markets by selling U.S. dollars in a bid to prop up the naira.
Nigeria’s main stock index fell 2.3% on Wednesday. It has tumbled almost 28% so far this year, and it is down 13.7% in December.
