Director, Sovereign Ratings, Standard and Poor’s, Ravi Bhatia, says the Central Bank of Nigeria may just be delaying further devaluation of the Naira than averting it.
The CBN had recently stopped sale of foreign exchange to importers of some 41 items at the official market. Mr. Bhatia believes the measure is not holistic enough to shore-up the strength of the naira which has been on a free fall in recent weeks.
The agency said it foresees a devaluation of the naira possibly by more than 15%.
“Another devaluation is inevitable… they will have no option but to devalue,” Mr. Bhatia said in Abuja.
After the last attempt to devalue the naira in November, the CBN has concentrated on reducing the flow of foreign currency at the interbank market. The apex bank introduced restrictions three weeks ago which diverted attention of importers to the open black market.
Mr. Bhatia said he is anticipating a gradual movement towards devaluation.
“I think at this stage the plan is to move in increments, not to do a “one big step” devaluation like they would in the old days,” he said.
The naira hit another record low on Wednesday, sliding down by 0.42% from Tuesday to end at N242.5 to a dollar in the parallel bureau de change market.
Despite assurance by the CBN that it does not intend to consider devaluation because of its effect on inflation, local and foreign investors have been in fear in the past months due to the possibility of Nigerian losing its place in the GBI-EM local currency debt index.