Speculators Run Risk On Naira Devaluation

By Emmanuel Aziken

Expectations of a devaluation of the naira in respect to the dollar may not be forthcoming in the immediate future despite pressures from the Breton Wood institutions, GreenWhiteGreen has gathered.  

The assertion follows increased volume dollar supply to the currency markets by the Central Bank of Nigeria on Thursday and the continuing debate on the appropriateness of a devaluation in the midst of the COVID-19 economic challenges.

Though the naira has been devalued in the black market with the currency selling as low as low as N450 to the dollar, at the I&E window the naira firmed up on Thursday trading at N386 to the dollar after gaining 36 kobo or 0.09% to what obtained on Wednesday.

GreenWhiteGreen gathered that the pressure on the CBN for devaluation follows the decision of the International Monetary Fund, IMF to grant Nigeria $3.4 billion in emergency support.

The IMF dollar flow is expected to help the CBN further defend the naira at present levels and there is optimism that the gradual opening up of the economy in western countries will lead to the increase in oil prices a development that will shore up Nigeria’s dollar oil receipts.

These developments GreenWhiteGreen gathered are emboldening the CBN to hold on to the present naira value.

Governor Godwin Emefiele had at the beginning of the week assured stakeholders and especially foreign investors of the readiness of the CBN to guarantee their remittances despite the pressures on the economy.

The foreign investors want to withdraw their dollars on the fear that the Naira could be devalued at as such weaken their investments.

However, the CBN sources say is not thinking along the line of an immediate devaluation for two strategic reasons.

First, one source revealed that the timing is not good for such a cataclysmic move as it could dislocate several fundamentals not directly related to dollar.

Second, is the political consideration. President Muhammadu Buhari while not bearing direct influence on the currency markets will be in an awkward position as it would be a mockery on his reported 2015 claim of leveling the naira and the dollar.

The developments sources say could in the immediate to short term lead to speculators burning their fingers in a way that some did during the naira crash of 2016 when the naira slipped to more than 500 to the dollar before making a recovery to 360.

Send Us A Press Statement Advertise With Us Contact Us

 And For More Nigerian News Visit GWG.NG