Foreign currency shortages and tight exchange controls have isolated Nigeria from international finance for most of the last decade.
With the sovereign now priced out of the Eurobond market, the government’s so-called “ways and means” financing of its deficit – through the central bank – surpassed a naira equivalent of $50 billion in 2022.
Inflation has subsequently soared above 20%, despite hikes to the monetary policy rate, which reached 17.5% in January.
Against an official exchange rate now at N461 to the dollar, the parallel rate has risen to N750.
[Investors are] not putting new money into Nigeria, but they’re moving into stocks, where there will be a bigger uplift if there’s a devaluation
Meanwhile, the great flows of foreign money that the stock market enjoyed before the 2014 oil-price crash have slowed to a trickle today, thanks to the difficulties of repatriating capital and, particularly in the case of bank shares, the perceived risks of central bank governor Godwin Emefiele’s policies.
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