The Central Bank of Nigeria’s Monetary Policy Committee might be forced to devalue the naira again after the general elections scheduled to hold in February, it was learnt on Monday.

The indication to this effect is coming less than two months after the MPC devalued the currency on November 25 from 155 to 168 to the United States dollar.

Sources said the proposed devaluation was because the currency was already trading at the interbank market below the 160-176 target band set by the CBN.

They said it was necessary to devalue the naira again in order to prevent further pressure on the currency and arrest subsequent depreciation of its value.

It was learnt that the fresh devaluation was meant to be carried out during the next meeting of the MPC, which is scheduled to hold later this month, but it was postponed till after the elections in February for political considerations.

This came just as industry analysts predicted that the naira, which currently sells between 191 and 193 against the dollar at the parallel market, would likely exchange for over 220 soon.

According to experts, the naira has remained under continued pressure owing to the continued fall in the prices of crude oil in the international market and increased demand for the dollar locally.

The development, they said, would lead to a number of economic challenges this year.

“After the elections, the naira will sell above 220 against the dollar at the parallel market. And it is also noteworthy to say that the CBN will devalue the naira again after the February elections. The reason is due to the falling oil prices and the current demand pressure we are witnessing on the dollar,” the Acting President, Association of Bureau de Change Operators, Mr. Aminu Gwadabe, told our correspondent in an interview on Monday.

Some Nigerian and foreign analysts had predicted that the naira would sell for between 195 and 205 at the official market this year.

They equally believe the CBN will devalue the naira again after the elections.

BGL Plc, a Nigeria-based research and investment advisory firm, quoted analysts in its recent 2015 outlook report as saying that the naira would sell around 205 to the dollar at the official market in 2015.

Goldman Sachs had on July 18, 2014 forecast that the naira would trade at N195 to the dollar in 12 months.

The BGL analysts said the sustained demand for the dollar “means that the fundamental foreign exchange weakening pressures will remain and a further reduction in foreign exchange reserves in the next few months is expected, which could trigger further peg adjustments until the fundamental foreign exchange weakening pressure wanes in 6-12 months. However, increased diversification of the economy is expected to trigger stability over time.”

According to the Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, the parallel market rate is expected to cross N200 as the dollar demand pressure persists.

He explained, “A N200/$ rate is only a 15 per cent adjustment as against 45 per cent devaluation in 2009. Although, projecting the value of the naira is currently clouded by several domestic and exogenous factors, the fair value of the currency is expected to be between N180/$ and N195/$ at the interbank market. The naira adjustment by the CBN is timely and the depreciation of the naira has reduced over time because the official rate is closer to equilibrium.

“A further depreciation of three to five per cent is also expected at the official market. This is due to anticipated impact of the global oil market spiral on external and fiscal buffers, which limits the central bank’s ability to support the naira. In addition, if the US changes its monetary policy stance, there might be a reversal of capital flows and an erosion of some of the external reserves.”

The CBN currently sells dollars to banks and authorised dealers at its twice-weekly regulated foreign exchange market, the Retail Dutch Auction System, for N168. However, the greenback closed at the interbank market at N185 per dollar on Monday.

Also on Monday, the dollar was sold on the streets of Lagos, Abuja and other cities for between N191 and N193. This brings the margin between the official market and parallel market rates to N25.

Going by the analysts’ prediction, if the dollar should sell for N205 at the official market, the margin between this official segment and the parallel market may make the greenback to go for about N230 on the streets.

When contacted, a CBN spokesman, Mr. Abdul Isah, said only the MPC could set the direction for the naira.

According to him, the committee will meet later this month to review the developments in the local and global economic environment and take necessary action.

He said there was a need to wait for the committee to hold its meeting before speculating on the fate of the naira.

http://www.punchng.com/business/business-economy/cbn-may-further-devalue-naira-after-elections/

So whether we vote for Buhari of gej, our currency is doomed already?

This is a trying moment for Nigerians. We will scale through by the grace of God

Japhet04:

iluvweed:

God is watching you too.

What do you expect, the incoming revenue is dwindling while some thieving bastard continues to loot.
Do not be deceived money is flying out of this country like pure water while enough money is not coming in.

There were once a country!