A Nigeria-based investment bank, Afrinvest West Africa Limited, in its 2017 economic outlook announced that the official exchange rate of naira may fall by about 31% to N400 per US dollar by 2017-ending.

According to Ike Chioke (photo), the Group Managing Director, Afrinvest, forced by possible development in the currency market the Central Bank of Nigeria (CBN) might have no choice than to reduce the official value of the naira from the current N305 per dollar to 400 per dollar. The GMD emphasized the need for major reforms in the currency market, petroleum downstream sector as well as other key sectors in order to help the country overcome its economic challenges.

“We note that the Nigerian economy, which is regarded as the largest in Africa as well as one of the most viable investment destinations, has been on a slippery slide downhill following the crash in commodity prices in the second half of 2014. The reluctance of Nigeria to impose appropriate policy reforms is perhaps most reflected in the currency market where a severe liquidity crunch has lingered after the CBN imposed capital control measures on FX transactions and fixed FX rate at N199.10/dollar in 2015 before moving the peg to N305.05/dollar in 2016,” he told Punch news.

He added that the outlook on price levels shows that inflation will persist in the region as a result of the increase in fuel and electricity prices and also currency devaluation.

Anita Fatunji