Naira may fall beyond N300 in 2016

Nabanker


Home | Finance | ( 1 ) | Subscribe

Posted by on Tuesday December 22, 2015 at 14:37:15:

Given the rate at which the Nigerian Naira has depreciated since after the 2015 elections to as low as N270 in the black market, predictions are that it's more likely to fall further to N300 and beyond in 2016 given the dwindling income from oil and the gradual depletion of Nigeria's foreign reserve.

The Central bank of Nigeria has made a lot of policies within a short term period aimed at restricting the availability of foreign currency to Nigerians and bank customers and a there are restrictions on access to forex for importers. It's basically because there is a high demand for foreign currency by Nigerians and that's one of the things kicking up the value of the US dollar and British Pounds. It shows that the CBN is finding it harder to meet the demands of people for forex.

Nigeria now has a new government and given the falling price of crude oil at the international market, the unfavourable policies of the government to foreign investors as well as the fact that oil is the major source of foreign for Nigeria, it seems more likely to fall further than rise in 2016. Many foreign investors are still waiting to see the direction of the government before making an investment.

We are not exactly sure why there is a high demand for foreign currencies by Nigerians but I think the demand has always been there and the problem rather is that there has been a shortage in supply of forex from abroad. Nigeria is no longer earning as much income as she once was but despite that, politicians have not decided to cut down on their allowances and spending.

Apart from the falling value of the Naira, Nigerians are also likely to face severe austerity measures in 2016 such as the removal of fuel subsidy and less expenditure by the new government. What will N100 be able to buy in 2016? Only time will tell.

Despite the fact that the exchange rate of the Naira is put at an artificial price of about N198 to 1 US dollar, it is sold at the
black market at a ridiculous price of about N270 per dollar. If the Naira can fall so low in December which is normally the time it get's to it's strongest value, it is more likely to fall further in 2016. As at December 2015, the US dollar was about N190 per unit but rose further against the Naira in 2015. The trend is more likely going to repeat itself in 2016 unless the government does something urgent about it.

Does it still make sense to keep saving money in Naira? Most Nigerians would prefer to save in foreign currencies like the dollar but not many of them have access to it and that's why the smart ones prefer converting their money to other forms of asset like stocks, real estate, gold and so on just to secure their wealth.






Post a Comment

Required fields are Name and Comment.


Name:

Email: (Optional)

Comment:


Recent Posts

Nigerians can now pay Cheques into savings accounts - Saturday September 17, 2016 12:58:19
Nigerian banks are sacking workers - Wednesday September 14, 2016 17:59:41
How I transferred money from GTBank with my mobile phone - Wednesday September 14, 2016 17:42:57
How Nigerian banks can attract and retain customers - Friday September 2, 2016 9:59:27
GTBank Naira MasterCard exchange rate per US dollar - Sunday August 28, 2016 22:57:39
Cash Deposit ATM stole my money - Tuesday August 23, 2016 12:44:30