Nigeria's naira will trade almost 13 percent weaker in a year's time amid concerns the Central Bank of Nigeria has not done enough to restore investor confidence, according to a Reuters poll on Friday. Last month, the bank left its benchmark rate at 14 percent, resisting calls from the finance minister to cut in order to help the government borrow more domestically without increasing debt servicing costs.
A Reuters poll of 15 analysts, taken in the past three days, suggested the naira will weaken to 363.57 against the dollar in a year from current levels of 322.60. Before that, the currency is expected to slip to 325.00 by end of this year. The low price of oil, the country's top foreign currency earner, has drained the country's foreign exchange reserves, which hit an 11-year-low of $24.61 billion last month.
There have been calls for the authorities to do more to boost the economy after it slid into recession for the first time in around 25 years. "The (central bank) is in a tight spot in any case. It has to manage the expectations of numerous constituencies (and) an increasingly antsy political leadership," said Rafiq Raji, managing director at Macroafricaintel Investment in Lagos.
Nigeria's economy is expected to contract 0.8 percent this year before recovering with 2.6 percent growth next year, still far off its average of around 5 percent over the last half decade. Dollar scarcity has persisted after the 16-month peg of 197 naira per dollar was lifted, however, frustrating businesses which need dollars to pay for imports.