Nigerian Currency Plunges to New Low, Central Bank Says the Naira Is Undervalued

The Nigerian currency continued its descent versus the greenback erstwhile it fell to a caller all-time debased of NGN950 per dollar. Folashodun Shonubi, the acting politician of the Central Bank of Nigeria, insists that the naira is presently undervalued. The International Monetary Fund (IMF) has said Nigeria’s “loose” fiscal and monetary policies are to blasted for the naira’s woes.

Nigeria May Abandon New Exchange Rate Policy

Nigeria’s rapidly depreciating currency precocious breached the 900 per dollar people for the archetypal clip aft its parallel marketplace speech complaint versus the greenback reportedly fell to a caller debased of NGN950:USD1 connected Aug 9. The currency’s latest plunge came conscionable days aft the Economic Intelligence Unit warned that Nigerian authorities whitethorn see abandoning the floating speech complaint authorities adopted successful mid-June.

According to a report from The Cable, the ongoing shortages of the greenback connected some the ceremonial and informal markets person fueled the naira’s latest descent versus large currencies. Meanwhile, the currency’s autumn has present prompted immoderate Nigerian economical commentators to forecast a further depreciation of the naira implicit the people of the adjacent fewer weeks.

However, contempt the currency’s continuing decline, Folashodun Shonubi, the Central Bank of Nigeria’s acting governor, insists that the naira is presently undervalued. In his remarks made astatine the National Institute of Security Studies (NISS), Shonubi maintained economical modeling had proven this assertion to beryllium correct.

“If you were to behaviour an economical modelling of Nigeria utilizing purchasing powerfulness parity, you would observe that the Naira is presently importantly undervalued,” the acting politician said.

Shonubi identified the channeling of diaspora remittances distant from the ceremonial overseas speech marketplace arsenic 1 of the reasons wherefore the naira has performed severely against the greenback. He besides accused unnamed Nigerian banks of fueling the naira’s depreciation via “illegal” dollar sales. The acting politician warned that the CBN would soon descend connected banks suspected to beryllium down the unsanctioned dollar sales.

Meanwhile, the International Monetary Fund (IMF) has reportedly blamed the naira’s woes connected the country’s “loose” fiscal and monetary policies. However, according to Ari Aisen, the planetary lender’s typical successful Nigeria, the state tin inactive springiness the naira a warring accidental by tightening its policies.

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