Lagos – A local financial firm has projected
increased calls on the Central Bank of Nigeria to devalue the Naira amid
tumbling oil prices.
This follows events in Azerbaijan, which is in crisis
following the plummeting of its currency, the manat.
On Monday, its central bank announced a major devaluation
and movement to a currency float, citing the external shock of tumbling oil
“We anticipate calls for Nigeria to follow suit, as we saw
with the devaluation of the Kazakh tenge in August. There are obvious parallels
to draw in terms of economic structure but some marked differences too,’
First Bank of Nigeria (FBN) Capital stated.
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The firm pointed out that oil’s share of GDP in Nigeria was
just 10 percent and it is therefore viable to rebuild the public finances on
the basis of taxing the predominant non-oil economy.
FBN Capital noted Azerbaijan was highly centralized due to
its Soviet heritage.
“President Aliyev may have deferred this latest devaluation
until after the successful legislative polls on 01 November. In Nigeria,
President Buhari also secured a strong electoral mandate this year and has
publicly congratulated the Central Bank of Nigeria governor for holding the
line on the naira exchange rate.”
The market watcher said its position remains that the
monetary authorities would devalue only as a last resort, an example being when
the CBN is struggling to meet priority foreign currency demand such as fuel
“Were this to happen, which we expect at some point in 2016,
a move to a floating regime would be a major surprise.”
- CAJ News