Further devaluation of Nigeria’s naira is likely

Significance This is the second devaluation of the naira in less than six months on the official foreign exchange (forex) market. The CBN has previously staved off a devaluation despite the economic pressures to do so, using policies such as restricting official forex to certain items for import. Impacts The devaluation will further increase inflationary pressures that have been rising since the closure of Nigeria’s land borders last year. The devaluation increases the likelihood of the official NGN/USD rate heading towards 500:1 over the short term. Pressure from state governors over revenue shortfalls and bureaucratic costs also likely played a factor in the most recent devaluation.