Currency update for Nigeria

Dollar and Euro Currency

Currency update for NGN

For a country that is rapidly approaching its 100 year anniversary, Nigeria still has many challenges if it is to take full advantage of its position as the most populous country in the African sub-continent and its incredible mineral wealth.

There is still considerable instability in the Country. In the North there is Boko-Haram, a muslim al-Qaeda linked terrorist organisation which has caused significant violence. And in the south there is the Movement for the Emancipation of the Nigerian Delta, known as “Mend”. Meanwhile the Government is coming under increasing domestic and international scrutiny with the recent leak of a letter between the Central Bank Governor and the President, Goodluck Jonathan, warning the leader that almost $50bn in oil revenue from 2012-13 was missing. Sadly this apparent large scale theft of the countries principle means (90%) of export earnings is by no means a new phenomenon.

With the general elections rapidly approaching in 2015 the Government of Goodluck Jonathan will be challenged to return to power with so many competing interests. The economy is currently growing at around 7% and with the oil price remaining high there is the belief that the continued growth of the country will remain. Local demand for consumer goods is starting to grow and on a continent, according to the McKinsey Global Institute, with the fastest-growing middle class this is being reflected well in Nigeria. Although there is still a massive disparity between the rich and poor.

So what for the Nigerian Naira?

The Naira (NGN) has the dubious pleasure of having a booming black economy for its exchange. The Nigerian Central Bank currently states that the Naira is NGN159 to USD$1 however the lack of liquidity in the NGN/USD/EURO/GBP market means that there has been a sizeable black market for the buying and selling of the currency. Estimates suggest that the rate on the black market is anywhere up to 7% different and delivery times can often be up to 1 week.

In the past month we have seen the Naira swing around 4% operating in the NGN157-163 bracket. This volatility has partly been put down to nervousness about upcoming primary elections and in late 2013 the defection of 37 lawmakers to a new opposition coalition party, the All Progressives Congress.

It is our belief that NGN will remain within the range of NGN157-163 to the USD and within the NGN259-265 to GBP for the majority 2014. We believe that growing domestic demand and the pick-up in the world economy will offset the political instability and maintain trading in this range without wild currency fluctuations seen in the 80’s and 90’s.

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Currency update for Nigeria

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