Friday, December 19, 2014

Nigeria fighting to defend currency after global oil price drop

Nigeria's central bank has brought in further measures to support its currency, the naira.

Buyers of foreign currency must use that money within 48 hours or be forced to sell it back at the rate set by the central bank.

The naira hit record lows this week of more than 187 against the dollar.

The prolonged fall in the oil price is causing serious problems for Nigeria, which is heavily dependent on the commodity.

Nigeria, which is Africa's largest oil producer, receives 70% of government revenue and 90% of all foreign exchange earnings from oil.

The Central Bank of Nigeria (CBN) warned it would impose sanctions on anyone who did not follow its new rules. Bet

Speculators are betting on further falls in the naira by buying foreign currency in the hope that they will be able to buy more when they reconvert their money back.

In November, the CBN devalued the naira to 168 against the dollar, but its action has not stopped it falling further.

Earlier this week, Nigeria was forced to revise its budget because of the dramatic fall in the price of oil.

Its finance minister, Ngozi Okonjo-Iweala, said its economy will now grow at 5.5% this year, rather than 6.4%.

In a separate development, Nigerian oil workers agreed to call off a strike that started on Monday.

A spokesman for one of the unions involved, Pengassan, said the government had given assurances that it would address union concerns over refinery maintenance.

This includes a renewed push to get a long-delayed bill passed in parliament, aimed at overhauling the industry and improving maintenance.


Related story: Nigeria cuts oil price benchmark due to falling global oil prices

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