The Nigerian naira has remained close to its record low despite important news from the country. The USD/NGN exchange was trading at 460, while the black market rate stands at 735. On the other hand, the USD/GBP was trading at 915 in the black market. So, what next for the Nigerian naira?
Important Nigeria news
There are several important news that could have an impact on the Nigerian naira. First, Nigeria is set to go through major changes in the energy market as Dangote launches his oil refinery plant in Lagos. The plant will be able to refine 650k barrels of oil per day at its peak. That will be enough to supply Nigeria’s needs and leave some for export.
Dangote’s oil refinery plant will change the dynamics of how the country’s energy sector works. Before the launch, Nigeria produces oil and exports it in a crude form and then imports refined products. This is usually an inefficient method. It now means that Nigeria will produce, refine, and use its oil and then export its spare capacity. This trend will be positive for the Nigerian naira.
The other important Nigeria naira news is the decision by the country’s parliament to change the country’s financing. The parliament passed a bill that will boost the debt upwards by over 50% in the next few years. This happened after the government converted loans worth over $49 billion into bonds that will be paid over decades.
This measure was made to avoid the collapse of the economy. In a statement, a senate report said:
“Due to the serious shortfall in government revenue, the federal government in order for the economy not to collapse, was compelled to borrow repeatedly from the CBN, exceeding the 5% threshold.”
What next for the Nigerian naira?
It is unclear how the soaring debt load will affect the Nigerian naira which has collapsed in the past few years. The official rate has collapsed by almost 200% since 2015, making it one of the most underperforming currencies in the emerging markets.
The other events that could move the Nigerian naira is the upcoming leadership change that will see Muhammadu Buhari exit. He will be replaced by Bola Tinubu, who will become the country’s next president.
Tinubu has made several pledges, including promising to export more and import less in a bid to support the Nigerian naira. He has also promised to end petroleum subsidies that cost the government billions per year.
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