Naira devaluation unlikely before elections analysts
According to recent reports, analysts are predicting that the Nigerian naira is unlikely to be devalued before the upcoming elections in February 2023. Here are some reasons why:
- Economic stability: The Central Bank of Nigeria (CBN) is keen to maintain economic stability ahead of the elections, and a devaluation could lead to increased inflation and economic uncertainty.
- Fiscal discipline: The government is committed to fiscal discipline and has been working to reduce its budget deficit. A devaluation could undermine these efforts and lead to increased borrowing costs.
- Exchange rate management: The CBN has been managing the exchange rate through various means, including the use of the Investors and Exporters (I&E) window, which has helped to stabilize the naira. Analysts believe that the CBN will continue to manage the exchange rate to maintain stability.
- Election-related uncertainty: The elections are expected to be closely contested, and a devaluation could create uncertainty and volatility in the market, which could negatively impact the economy.
- International reserves: Nigeria's foreign exchange reserves have been increasing, which provides a buffer against potential external shocks and reduces the need for a devaluation.
Some analysts have predicted that the naira may appreciate slightly in the short term due to the CBN's efforts to manage the exchange rate and the increasing foreign exchange reserves.
It's worth noting that while a devaluation may not be imminent, the naira's value is still subject to fluctuations based on various market and economic factors.