An international think-tank has reiterated calls to devalue the local currency amid the central bank’s international reserve position dwindling.
The call by Rand Merchant Bank follows disclosure the Central Bank of Nigeria’s international reserve declined to US$27,8 billion, falling 11 percent year-on-year.
RMB raised concern even though Nigeria’s international reserve to external debt ratio is far superior to that of its oil-exporting peers.
“It could narrow abruptly if the CBN maintains its current exchange rate stance, heightening liquidity risk,” the financial firm stated.
RMB said these concerns were likely to reflect in the pricing of Nigeria’s US dollar-denominated debt, which has re-priced sharply over the last 12 months.
The Naira has fallen sharply against the major currencies such as the Dollar following plummeting oil prices in the international markets.
CBN has resisted calls to devalue, and appear to have the support of President Muhammadu Buhari, who recently said that could worsen the hardships Nigerians already suffered.