Analysts and stakeholders have continued to express fear over the possible devaluation of the naira in coming months.
The acting Governor, Central Bank of Nigeria, Dr. Sarah Alade, however, said there was no plan to devalue the naira, stressing that the CBN was committed to defending the nation’s currency.
But the CBN may be forced to lower its currency peg if foreign reserves continue to dwindle, according to analysts at London-based Standard Chartered Plc.
Also, Paarl, a South Africa-based independent body of economists, is of the opinion that the falling reserves may force the central bank to devalue the naira.
The external reserves have declined 13 per cent this year to $37.9bn.
But the Governor-Designate, CBN, Mr. Godwin Emefiele, said devaluating the naira would be “devastating” for the economy.
Heineken Nigerian unit, the nation’s largest brewer, said possible currency devaluation by the central bank would hurt the company’s earnings, suppressing profit ahead of next year’s elections, Bloomberg reported.
Nigerian Breweries Plc imports an average of about 40 per cent of the raw ingredients it needs to produce beverages in Nigeria, including its flagship Star lager, according to the company’s Chief Executive Officer, Nicolaas Vervelde.
He said this percentage was higher for Heineken-branded beer, which required a greater proportion of imported malted barley.
“A devaluation of the naira will certainly have some effect,” said Vervelde. “Things like hops you can’t get locally and every beer up to now needs hops.”
The naira weakened to an all-time low against the dollar after President Goodluck Jonathan suspended Governor Lamido Sanusi in February for alleged financial recklessness and misconduct; the allegations, which Sanusi has denied.
The currency strengthened 0.3 per cent on Friday to 163.45 per dollar in Lagos, paring its decline for the year to about 2.1 perc ent.
Nigerian Breweries “will hedge a bit more” to counter the currency decline though the company is expecting an earnings boost later this year as politicians increase spending ahead of elections in 2015, according to Vervelde.