Business CBN's Black Market Attack is Just a Stopgap Until FG Floats the Naira- Bloomberg

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LequteMan

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According to a report from Bloomberg, the recent gains of the naira at the black market due to the flooding of the market with dollars by the CBN is only temporary.

Don’t be fooled by the biggest black-market gain in a year for Nigeria’s naira.

The rally, sparked by increased sales of foreign exchange forwards and looser capital controls, is contingent on the central bank continuing to sell down its reserves. And until it devalues or makes a clear switch to a free-floating currency, Africa’s most-populous country will struggle to lure back foreign investors, according to JPMorgan Chase & Co. and Renaissance Capital.

Forwards suggest more declines to come, investors are shunning naira assets, and a web of alternative exchange rates only adds to the confusion over the currency’s real value.

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