The Nigerian naira hit a new record low of 414 to the dollar in the parallel market on Monday as the continents second largest economy continued to struggle with a biting scarcity of foreign exchange, with market pundits predicting further pressure in the foreign exchange market this week.

Forex traders said increased demand for greenbacks by summer travelers and parents paying for school fees overseas was the main cause for the local currency depreciation, PUNCH.ng reported

They said the naira depreciation would continue despite repeated efforts by the central bank to inject dollar into the market.

“There is nothing in the policy environment that will arrest the decline unless the central bank has increased capacity to supply the market, which unfortunately it doesn’t have. So, we should expect the naira to remain under pressure in the coming week,” Johnson Chukwu, Chief Executive Officer at Cowry Asset Management Limited, told Reuters.

Last week, the Central Bank of Nigeria (CBN) banned nine banks from the forex market for failing to remit up to $2.3 billion, belonging to state-owned oil companies, to the government.

CBN’s move to tighten foreign exchange transactions in the West African nation in March forced banks to delay hard currency loan and trade repayments, which increased their risk of default.

“The decline of the naira against the dollar is beyond the recent suspension of some banks from the forex market. We have witnessed suspension of banks in the past, and it did not lead to any spike in exchange rate. The major challenge we have now is supply shortage. If that improves, naira will stabilize,” Chukwu said.

Businesses in the Africa’s top oil producer are struggling to get hold of foreign exchange even after CBN devalued the currency in June to attract investment from abroad, Bloomberg reported.

In recent months, there have been concerns over the stability of Nigeria’s banking sector after CBN took over management of the country’s eighth largest commercial bank, Skye Bank, in what it said were consistent breach of cash liquidity ratios by the lender.

The regulator further disclosed that “one or two other” banks were showing signs of distress.

While authorities in Nigeria have maintained that banks are not in distress at the moment, there has been an increase in unpaid loans as Africa’s largest economy stare at a possible recession dragged down by a tumbling local currency and low oil prices on the international markets.