Following the continued widening of the gap between the value of the naira on the black and official markets, a devaluation is now inevitable, Samir Gadio, head of Africa strategy at Standard Chartered Bank said.
“With pressure on foreign reserves and oil prices at $30 per barrel, devaluation is now unavoidable. The issue will be the quantum and methodology,” he said.
Recently, Russian investment bank, Renaissance Capital, recently said a fair price for the naira is 305 to a dollar but stated that a devaluation to 240 or 250 per dollar is appropriate.
Currency and stock markets have been hard hit by the persistent fall in crude, Nigeria’s main export, triggering a fall in government revenues and exit of foreign investors from the local bourse.
Nigerian stocks on Wednesday fell 3.6 percent to near a three-and-half-year low after the naira hit a new trough of 300 per dollar on the black market, weighed down by sliding oil prices and the central bank decision to curb dollar supply.
The Central bank had stopped dollar sale to Bureaux de Change, accusing them of negatively speculating about the naira, Nigerian Bulletin reported.
Posted by Janice Johnson
