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IMF Urges Nigeria To Devalue Its Currency Further

IMF Urges Nigeria To Devalue Its Currency Further

The International Monetary Fund (IMF) wants Nigeria  to devalue its currency again and take other reform measures to save the Africa’s largest economy from an impending recession in 2016, the Associated Press reported.

The Central Bank of Nigeria (CBN) devalued the Naira by 8 percent in November last year and lowered the official exchange rate to 198 per dollar, but a more that a quarter depreciation of the currency since then has it trading at about 222 to the greenback currently.

The country’s central bank further introduced tighter trading rules to limit speculation by commercial bank traders, increased its benchmark interest rate, and banned the importation of nearly 40 types of goods to stop the naira from plunging.

IMF now join local economists and analysts who have been asking the regulator to devalue the naira for most of this year. Some sector players are of the opinion that CBN’s restriction and rules are only delaying the inevitable devaluation of the local currency.

First Bank of Nigeria Chief Executive Officer Bisi Onasanya  said the regulator needed to act quickly and devalue the naira or else Africa’s largest economy could bear the brunt.

“We need to bite the bullet and move on, or there will be repercussions over the long-term,” Onasanya told a conference at the Nigerian Stock Exchange in June, Bloomberg reported.

Speaking at the IMF annual meeting that took place in Lima, Peru this week, the fund’s Africa director Antoinette Sayeh said Nigeria was only “making it harder for the average person to buy milk” and added that the foreign exchange restrictions are “quite detrimental”.

Analysts said that investors, including Morgan Stanley, Aberdeen Asset Management Plc and Landesbank Berlin Investment, are holding off from buying Nigerian assets as they await for a devaluation of the local currency before buying equities and fixed income securities in the country.