The naira at the official foreign exchange market has lost about 5 percent of its value when placed side by side with the dollar. The act which Central Bank of Nigeria termed ‘price adjustment’, according to economists, was a step in a right direction as the biggest exporter of oil in Africa contends with dearth of foreign exchange inflow due to current global market realities. Meanwhile, the decision of the bank may have its fallout on every sector of the economy.
“A significant devaluation of the Nigerian naira is likely in 12 to 18 months to stabilise the external accounts of Africa’s biggest oil producer. An exchange rate of N500-N550 per dollar should bring external balance”, economists Dylan Smith and Andrew Matheny say in research note produced by Goldman Sachs.
“Recent inflows stemming from loans from international financial institutions and import restrictions not sustainable and will prolong buildup of imbalances before adjustment,”Goldman Sachs added. “The CBN that owns the process has tagged it price adjustment and therefore so the matter should rest. But once you officially increase the exchange rate; that usually in common parlance is devaluation as opposed to depreciation which is the variant of loss in value which is market driven in a floating market value determination environment. What has just happened is also to a large extent market driven.
Business Business Latest News, Business Business Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: LeadershipNGA - 🏆 4. / 77 Read more »