Report: CBN May Devalue Naira Massively After Elections As the Gap Between Black Market, Official Rate Widens
- The Central Bank of Nigeria (CBN) is likely to devalue the naira after elections in February 2023
- The move, according to a new report, will be the biggest devaluation by CBN in six years
- The move is amid the rising difference between the black and official market rate, which is now above N300
A poll sampling financial experts have revealed that the Central Bank of Nigeria will devalue Naira after the election.
According to Bloomberg, which conducted the poll, the expected devaluation will be the biggest in the last six years.
The feelings from the respondents is coming amid a huge exchange rate gap between the official market and parallel markets by almost 77 per cent or N330.
Source: Getty Images
What are experts saying
Of the 13 participants in the Bloomberg poll, 11 expect the Central Bank of Nigeria to devalue the naira after the election.
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The remaining two predict it will continue with a gradual depreciation of the currency that started with adopting the more flexible NAFEX, also known as the investors and exporters exchange rate, last year.
The median of 10 participants in the Bloomberg poll sees the fair value of the local unit at 583 per dollar.
The implication of the Naira devaluation
The report quoted the head of research at SBM Intelligence, Ikemesit Effiong, as saying:
“There will be a major devaluation either on President Muhammadu Buhari’s way out or in the first few months of the new administration.”
Should the CBN goes ahead with its plan, the experts quoted in the report fear expect Nigeria’s inflation which is at 21 per cent will likely jump further as traders and exporters will adjust prices.
Another significant impact is the cost of foreign loans, this will mean Nigeria will need more Naira to pay off the outstanding $40.06 billion as of June 2022.
On the bright side, however, the devaluation of the currency would help stop the shortage and rationing of dollars.
This is because more foreign investors will come into the country knowing there is a clear understanding one what their investment is worth.
Analysts have always shared the opinion that Nigeria's foreign exchange crises have been a drag on business operations in the country and an overall disincentive to invest in Nigeria.
Nigerian banks announce new working days, closing time
Meanwhile, Nigerian banks have announced changes to their operating hours in order to assist Nigerians holding soon-to-expire Naira currencies
The banks have already announced that they have delivered notifications of their working hours via their social media channels and customers' emails
Details of the contents of their emails and changes were captured by Legit.ng in this report.
Source: Legit.ng
