President Muhammadu Buhari has hinted that the Naira may be devalued in early 2016.
“I am aware of the problems many Nigerians currently have in accessing foreign exchange for their various purposes,” the president told lawmakers in Abuja during the 2016 budget presentation. “These are clearly due to the current inadequacies in the supply of foreign exchange. We are carefully assessing our exchange-rate regime, keeping in mind our willingness to attract foreign investors, but at the same time managing and controlling inflation to a level that won’t harm average Nigerians.”
Bloomberg reports
The president’s change of tone means a devaluation and loosening of currency-trading restrictions may take place about Jan. 4, when the central bank reopens the interbank market, which has been shut since Dec. 18 for the Christmas holidays, according to Razia Khan, the London-based head of Africa research at Standard Chartered Plc, which predicts the naira will weaken to 220 per dollar in the first quarter and 228 by the end of 2016.
“There’s recognition that the current system isn’t working and they need to move to something better,” Khan said by phone. “There could be some reset of the mid-rate to a new point, with a band around that. No one expects Nigeria will move to a free-float. That wouldn’t be in keeping with what the president said about keeping the interests of all Nigerians in mind.”
Leave a Reply