How events in Azerbaijan might impact on CBN policies
LAGOS, (CAJ News) – A Nigeria financial firm has projected increased calls on the Central Bank of Nigeria to devalue the Naira amid tumbling oil prices.
This follows events in Azerbaijan, which is in crisis following the plummeting of its currency, the manat.On Monday, its central bank announced a major devaluation and movement to a currency float, citing the external shock of tumbling oil prices.
“We anticipate calls for Nigeria to follow suit, as we saw with the devaluation of the Kazakh tenge in August. There are obvious parallels to draw in terms of economic structure but some marked differences too,’First Bank of Nigeria (FBN) Capital stated.
The firm pointed out that oil’s share of GDP in Nigeria was just 10 percent and it is therefore viable to rebuild the public finances on the basis of taxing the predominant non-oil economy.FBN Capital noted Azerbaijan was highly centralized due to its Soviet heritage.
“President Aliyev may have deferred this latest devaluation until afterthe successful legislative polls on 01 November. In Nigeria, President Buhari also secured a strong electoral mandate this year and has publicly congratulated the Central Bank of Nigeria governor for holding the line onthe naira exchange rate.”
The market watcher said its position remains that the monetary authorities would devalue only as a last resort, an example being when the CBN is struggling to meet priority foreign currency demand such as fuel payments.
“Were this to happen, which we expect at some point in 2016, a move to a floating regime would be a major surprise.”
– CAJ News
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