Nigeria "is caught in a macro hurricane," famed short seller James Chanos told the annual Sohn Investment Conference last week. With currency reserves running low, the country could have "a big problem" within a few years, he said. Calling the country "a borderline failed state," Chanos added that he was shorting South African assets, in part because of their exposure to Nigeria.

In the year that Nigerians elected a new president, oil prices collapsed by at least 30 percent. This week, Nigeria's stock market staged a relief rally after the closely watched MSCI Frontier Markets Index decided to keep the country in the benchmark, after warning last month that Nigeria was at risk of being booted from the index. Still, the outlook for Africa's largest economy remains grim. The extremist group Boko Haram has created significant political and security challenges for the embattled government of Muhammadu Buhari, and raise risks that could hit oil production.

"Nigeria is in trouble," Steve Hanke, a professor of applied economics at Johns Hopkins, told CNBC in an interview. Amid double-digit inflation, Nigeria's foreign reserves are dwindling as the government races to shore up a swooning currency, the naira.

Using a purchasing power parity metric, Hanke estimates that the country's prices are surging by a whopping 46 percent, far above the official rate of between 11 and 13 percent. Weak growth — Nigeria's economy expanded by less than 3 percent last year — has done little to curb soaring food prices, which have risen every month since December 2015.

Meanwhile, oil prices remain firmly under $50 per barrel, heightening the risk of what consulting firm PricewaterhouseCoopers noted in a 2015 report could become a "security shock," as weak growth feeds political instability. Currently, the country's 2016 budget assumes an oil price of $38 per barrel. Razia Khan, chief economist for Africa at Standard Chartered, expects crude will rise later in the year, but growth is likely to remain muted. Khan noted that the International Monetary Fund "expects growth to decline even further in 2016, to 2.3 percent."

Oil gives Nigeria around 95 percent of its foreign earnings. Should crude remain at current levels, PwC expects growth to contract and oil revenues to dwindle to $20 billion. Meanwhile, the currency has already overshot PwC's worst-case forecast for this year, blowing past 320 to the U.S. dollar recently. "The currency is junk and the government is incompetent and corrupt," said Johns Hopkins' Hanke. "The only sure-fire way to solve all these problems is for Nigeria to officially replace its junk currency."

Source:http://www.afripol.org/afripol/item/1845-the-currency-naira-is-junk--professor-hanke-of-johns-hopkins-university.html?tmpl=component&print=1

I don't share Steve Hanke's pessimism - but of course, I may be biased because I am a Nigerian. The main worry is whether the actual level of foreign reserves held by the CBN is lower than the official data suggests. If it is and oil prices don't rally anytime soon, expect more pain in the immediate future.

Op you want make I confirm?
Yes it is. With almost all goods and services doubling in their prices, rising unemployment, near zero budget implementation, rising number of litigations involving govt, poor economic policies, incompetent management, high profile and coded corruption, etc, it is a junk currency.