Nigeria Central Bank devalues currency

2014-11-25 20:36
West Africa is struggling to control a cholera outbreak that has spread from Nigeria to nearby countries.

West Africa is struggling to control a cholera outbreak that has spread from Nigeria to nearby countries.

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

Abuja - Nigeria devalued its currency on Tuesday, seeking to stabilise the naira after it hit historic lows against the US dollar, as falling world oil prices hurt the country's foreign reserves.

The naira's street value had already fallen before the surprise moves announced by Central Bank of Nigeria (CBN) Governor Godwin Emefiele.

It had been trading at nearly 180 naira to the dollar, despite the official band of 150-160 naira, and the Central Bank had vowed to continue defending the currency against market pressures.

But Nigeria, which derives roughly 70% of government revenue from oil sales, has had to cope with dwindling foreign reserves amid the oil price slide, making it increasingly tough for the central bank to defend the naira.

"The committee was of the opinion that the economy stood to gain by... allowing some flexibility in the exchange rate," Emefiele said after a Monetary Policy Committee (MPC) meeting.

The central bank has set the new target rate at 168 naira to the dollar, he said.

Economic analyst Bismark Rewane told AFP that the move showed "the independence of the central bank".

"It also shows that oil price movement can drive people to do things which may not be politically popular," he said.

He added that a failure to accept the current real market value of the naira would likely have backfired.

"If they did something that the market didn't like then the naira could have just collapsed," he said.

Falling oil prices

Devaluing the currency, especially three months before a general election, may not be a popular move in President Goodluck Jonathan's inner circle, especially as the Nigerian leader tries to trumpet economic gains as he campaigns for re-election.

But Rewane and other analysts said the CBN had no choice after Nigeria's main crude product slipped to $78 per barrel, after selling at more than $100 just two months ago.

"It was a difficult decision, but one which everyone believes had to be made," said Jide Akintunde, editor of the Financial Nigeria magazine.

Finance Minister Ngozi Ikonjo-Iweala acknowledged earlier this month that falling oil prices had created serious challenges for Africa's top producer, and announced a series of measures including new taxes on luxury items to boost government revenue.

The CBN on Tuesday also raised the rate at which private banks can borrow from the central bank by 100 points, from 12% to 13 %.

Read more on:    goodluck jonathan  |  nigeria  |  west africa

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24


Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.