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Nigeria's currency plummeted Monday, losing more than 40 percent of its value as the government floated the naira for the first time in the history of the oil-producing nation.

The move was forced by a spiraling economic crisis and massive shortage of foreign exchange created by slumping oil prices and aggravated by President Muhammadu Buhari's 16-month-long insistence that the Central Bank defend the naira at a fixed rate of 197 to the dollar. Other oil producers like Angola and Venezuela devalued months ago.

The naira started Monday at 255 to the dollar but ended with $530 million being traded at 280 to the dollar among 21 banks, according to traders who insisted on anonymity because the Central Bank has not published the figures.

The naira had crashed to 370 to the dollar on the parallel market before last Wednesday's announcement that market forces will prevail amid a backlog of demand estimated at $4 billion by Nigerian economic analyst SBM Intelligence.

Private foreign exchange dealers stopped trading Monday as people wanting to buy foreign currency began bidding at banks, with the naira's new value to be decided by demand with no initial intervention, Central Bank officials said.

The parallel market rate dropped to between 315 and 330 to the dollar.

"This is good news for the majority of Nigerians," Ayo Teriba, CEO of Economic Associates consultancy, said of the devaluation. "The biggest gain is on the appreciation of the parallel market because the parallel market devaluation has destroyed domestic activities, with prices of local goods skyrocketing." Imported goods also have doubled and trebled in price.

Inflation is soaring at nearly 16 percent this month, and analysts say it will get worse before it slows down.

The parallel market will retain relevance as long as the Central Bank maintains a ban on buying dollars from banks for imports of 41 restricted items, from private jets to tomatoes and toothpicks, a move to boost domestic production and reduce the West African nation's heavy reliance on imports.

The devaluation is a boon for MTN, Africa's largest telecommunications company, which this month negotiated a deal to pay a fine of 330 billion naira, now effectively discounted by about 30 percent.

Among losers are companies with billions of naira trapped in Nigeria that they were not allowed to repatriate.

Analysts said the devaluation could exacerbate bad debts already standing at 10 percent of bank loans. Bankers will adjust loans made in dollars to the new value of the naira, including more than $10 billion loaned to Nigerian companies to buy assets from oil multinationals in recent years.