Ecobank Plc in a recent reseaech reported by the Punch has said that the naira may be devalued by 15 per cent.
As expected, the research based it’s conclusion on the recent drop in global oil prices which has seen the CBN take extreme measures to save the currency as it instigates a sell off in the stock market.
Here is how Ecobank explained their reason for the possible devaluation of the naira.
“We expect a devaluation of up to 15 per cent in the weeks ahead, which would be around half the scale of the 27 per cent devaluation that occurred in November 2008. This was driven by the collapse of oil prices in preceding months, a similar situation that appears to be developing now,” the report said.
“Due to the bearish outlook for oil prices, the CBN is under growing pressure to continue supplying the dollar to the RDAS at previous high levels to support the +/-3 per cent N155 exchange rate. A formal announcement on devaluation may be provided at the 25 November MPC meeting.”
Rash of CBN Circulars
“The November 6 circulars followed the CBN’s circular of 28 October, which capped the spread at N0.01 between the CBN’s dollar buy and sell rates in the interbank market. This FX circular also advised the transfer of some funds that were previously offered via the CBN’s RDAS window to the interbank market, which increased pressure on the interbank FX market.”
According to the report, the CBN’s actions are aimed at addressing naira pressures that have increased significantly in recent weeks