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Pressure grows on Buhari to devalue Naira

by Ihechukwu Njoku
08 Jan 2016 at 16:38hrs | Views
The visit of International Monetary Fund (IMF) chief Christine Lagarde to Nigeria has placed an uncomfortable spotlight on the fiscal woes of Africa's biggest oil producer as the pressure on President Muhammadu Buhari to devalue the Nigerian currency has increased.ez\

Several articles from international financial news providers have reiterated the call for Buhari to devalue the Nigerian naira in lieu of the steadily decreasing oil prices or risk further economic woes.

In a report titled, 'Pressure Mounts for Nigeria Naira Devaluation on Oil Plunge', Bloomberg noted, "The Central Bank of Nigeria may revise its target for the naira by more than 20 percent to 240-250 per dollar as oil continues its decline," citing the research of London based economist Alex Cameron.

"Cumbersome foreign exchange restrictions are strangling economic growth," the media house further quoted economist John Ashbourne as saying. "The authorities will be forced to devalue the naira in the first half of 2016."

Financial Times published an article titled, 'Nigerian naira: is the end nigh?' The newspaper surmised, "A currency crisis is brewing in Nigeria, with investors betting Africa's largest economy could soon be forced to devalue its currency as lower oil prices strain its finances."

"Such a devaluation will be painful, but probably less damaging in the long run than the gradual strangulation imposed by the current system," the article concluded.

Oluseun Onigbinde wrote a practical report titled, 'It's Naira or Never: Nigeria Needs Decisive Action On Its Currency' for The Guardian UK.

He noted, "This devaluation is keenly anticipated by many foreign investors, but some analysts have warned it could lead to more speculative trade, and have questioned how the naira's 'fair value' will be determined. Until now, the government has rejected this course of action, but it may be forced to reconsider."

Although Lagarde has not officially stated any agenda to discuss devaluation of the naira during her four-day visit to Nigeria, analysts have suggested the sore subject is high on the priorities for the IMF chief's meetings with Buhari.

Several online commentators have observed the heightened calls for devaluation come several days after a 'prediction' by prominent Nigerian 'Prophet', TB Joshua who allegedly warned Buhari about the currency crisis.

"The president will do everything to reject revaluation of the naira – which is a good idea from a good leader. But there will be overwhelming pressure which he will not be able to resist," Joshua purportedly stated in his New Year 'prophecy' on Christian television network Emmanuel TV.

"He has good intentions but a king's intentions cannot be carried out properly without the support of the subjects. He needs your support to lead us out of the valley," the cleric added. "Nigerians, support and pray for your leader. The future is crying for help."

Joshua's supporters claim he had similarly predicted the rapid decline in oil prices in December 2013, stating Nigeria would soon be forced to 'drink' its own oil.

Ihechukwu Njoku is a Nigerian journalist currently in Abuja

Source - Ihechukwu Njoku