The calls for the Buhari led administration to devalue the Naira hasn’t stopped, as ratings agency Standard & Poor’s reiterated on Thursday that Nigeria will have to devalue its currency. The agency expects this to happen at some stage in 2016 and in gradual adjustments.
Analysts and investors have said that the devaluation of the Naira is long overdue for Nigeria, whose currency has been badly hit by the consistent crash in oil prices.
“Their line has been to try to hold it as much as possible, and they are trying to continue that policy…alongside the restrictions on imports as well,” said Ravi Bhatia, Director of Sovereign and International Public Finance at Standard & Poor’s.
“But at some point they are going to have to move, but I think they are going to try and do it incrementally and not (in) big jumps,” Bhatia told reporters in a briefing, adding he expected this to happen in one or two increments.
Bhatia also stated that because Brent crude accounts for about 95 percent of Nigeria’s foreign exchange earnings devaluation will only help a little, but it is not enough to solve all the problems.
“(Nigeria) is going to face a very tough year in 2016.”
The Director also saw government talk of shifting to non-oil revenue as “overstated” and not easy to do.