Nigeria’s local currency, the Naira, is expected to weaken further over time, despite signs of recovery from a record low on Thursday, according to the country’s finance minister.
According to Bloomberg News, the naira gained 0.0367% to 435.84 on the spot market as of 5:30 p.m. in Lagos on Thursday, following a recovery from a record low of N436 to the US dollar on Wednesday.
Nigeria’s currency is likely to fall even further, according to Finance Minister Zainab Ahmed in an interview from Egypt’s new administrative capital. “It will happen with time,” she said, without giving any timeline.
Ahmed also ruled out Nigeria implementing a program from the International Monetary Fund to address the nation’s fiscal issues, which include declining revenues and rising debt service expenses.
Africa’s largest economy maintains multiple exchange rates, the most important of which are a tightly controlled official rate and an unauthorized parallel rate at which many Nigerians obtain dollars, which is roughly 60% weaker. The World Bank and IMF have urged Nigeria to unify its rates.
The weakening of the official rate “looks more like a gradual and partial convergence to higher effective exchange rate levels as the central bank already sells USD to corporates at up to 465 naira on the spot market and auctions for small firms,” said Samir Gadio, head of Africa Strategy at Standard Chartered Bank.
Gadio added that it was unlikely the outgoing government would adjust its official rate ahead of February’s presidential election.