In its latest Country Report on Nigeria, published on Friday, the Economist Intelligence Unit (EIU) highlighted the Central Bank of Nigeria’s (CBN) current liquidity constraints in bolstering the naira. Following the CBN’s move to unify segments of the foreign exchange market on June 14, 2023, the local currency experienced a significant depreciation, with the naira weakening by 36.56% to 632.77/$ compared to 463.38/$ at the official market.
Since then, the naira has faced ongoing challenges against the dollar, exacerbated by a second devaluation in February, which analysts estimate to be around 45%. This has resulted in the naira being ranked as the second-worst-performing currency globally, trailing only the Lebanese pound.
According to the EIU report, the CBN may need to explore foreign borrowing as a potential solution to stabilize the naira and meet its foreign exchange obligations. This suggestion comes amidst ongoing efforts to address the widening gap between official and parallel market rates.
The EIU’s assessment underscores the pressing need for strategic measures to alleviate pressure on the naira and restore stability to Nigeria’s foreign exchange market.
