Nigeria’s naira crumbles to record low as oil pressures mount

Yemisi Izuora/Agency Report

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Nigeria’s economy has plunged as investors fear that the oil reliant nation will suffer from a recent slump in prices

The Nigerian naira has fallen by more than 7.5pc against the dollar, ahead of a critical election in the country next month.

The naira has slumped to record lows, falling beneath 200 per US dollar as market pressures have broken the currency’s back.

The currency has been left bruised by recent falls in the value of oil. Brent crude traded as high as $115 per barrel last June, but has since dropped to trade at six-year lows of around $50.

Nigeria is Africa’s largest economy, and has been vulnerable to the drop in oil values due to its reliance on commodity revenues.

Oil and gas products make up more than 90pc of Nigeria’s exports, according to data compiled by the Observatory of Economic Complexity.

Trading in the currency was halted on Wednesday, Bloomberg has reported, in the wake of a central bank decision on the previous day to hold interest rates.

The Central Bank of Nigeria maintained its key rate at 13pc. Jack Allen of Capital Economics said: “We suspect that once next month’s general election is out of the way, monetary policy will be tightened in order to reduce inflationary pressure.”

“We have pencilled in two percentage points of hikes this year, which would take the policy rate to 15pc,” he added.

Samir Gadio, head of African strategy at Standard Chartered told Bloomberg: “The market is not trading so far this morning … there hasn’t been any trading because of this meeting.”

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