LONDON: Nigeria's naira slipped to its weakest level in months against the dollar in the non-deliverable forward market on Monday as expectations mounted that the central bank would need to soon devalue the currency.
One month non-deliverable forwards (NDF) showed the naira trading as high as 221.30 per dollar - its weakest in 16 weeks and a change of 3.5 percent on the day. Three-month NDFs saw the naira slip 4.25 percent to 235 - the weakest level since early March.
"The pressure is definitely there. There are hints that the top of the government is thinking seriously about letting the dollar naira revise higher," said Luis Costa, head of CEEMEA debt and FX strategy at Citi, adding devaluation appeared to be "a matter of time."
"Essentially there is a balance of payments crisis here and unless oil goes to $80 a barrel it will be difficult to avoid (a change in currency regime)."
Talk of a devaluation has been rife since Vice President Yemi Osinbajo said the central bank needed to change its foreign currency policies to spur investment.
Comments
Comments are closed for this article.