The naira hit a fresh low on the black market on Friday, quoted at 506 per dollar, as traders tested new levels to try to tempt dollar holders to sell.

The currency has hovered near the 500 level for more than two weeks and, with demand for dollars swelling, crossed the threshold as the unapproved retail market opened on Friday, according to Reuters.

On the official interbank market, lenders had traded only $1.30m at 315 per dollar by 1130 GMT, traders said, as the Central Bank of Nigeria continued to ration dollar supplies.

Meanwhile, the naira tumbled against the United States dollar on the parallel market to 503 on Thursday, down from the 500 recorded on Wednesday.

The local currency had closed at 499 and 498 on Tuesday and Monday, respectively.

This came almost two weeks after the naira touched 500/dollar briefly and returned to 498/dollar.

The local currency had been stable against the greenback for about three weeks.

Economic and financial experts are divided over the outlook for the naira this year but many have said the local currency may depreciate further in the coming months.

The external reserves also rose to $28.6bn on February 8, the CBN’s data showed on Thursday.

The naira might fall to around 520/dollar, the Chief Executive Officer of Lagos-based research firm, Financial Derivatives Company, Mr. Bismarck Rewane, had said.

On the official market, it remained at 305.25/dollar, where it has been trading since last August.

The CBN last week sold $660m in three and five-month currency forwards at an auction aimed at clearing a backlog of dollar demand.

But traders said it was not enough to satisfy the market.

“Despite rising FX reserves, it’s the amount of the FX that is supplied that matters. The parallel market, by its nature, is particularly sensitive to demand-supply imbalances, and has a tendency to overshoot,” Reuters reported, quoting the Head of Africa Research at Standard Chartered Bank, Razia Khan.

“Supply of FX matters more than any other factor,” she added.