Naira falls to record as President-Elect readies to take over
Nigeria’s central bank allowed the nation’s currency to weaken by the most in almost five months, days before Bola Tinubu takes over as president of Africa’s biggest economy.
The naira weakened to a record 465.07 per dollar as of 1.11 p.m. local time, the biggest drop since Dec. 29. It is the second time in three days that the currency is touching a new low.
Tinubu, who will take over as president on May 29, has pledged to end the practice of maintaining multiple exchange rates — dominated by a tightly controlled official rate — and pursue a more flexible policy. That’s a break from outgoing President Muhammadu Buhari who encouraged the central bank to manage the currency.
The naira could weaken as much as 15% after Tinubu becomes president, Nikolaus Geromont, a fixed-income analyst at Johannesburg-based Absa Group Ltd., said in a research note on Wednesday. “We expect the naira to be upwardly adjusted to 530/USD after the presidential inauguration.”
A weaker currency will help the West African nation cut trade imbalances and reduce the pressure on foreign-exchange reserves, which declined to near a two-year low of $35.3 billion in April, just enough to pay for 5.5 months of imports, according to Lagos-based FBNQuest Capital.
