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Nigeria needs to clear dollar backlog to avoid further devaluation, analysts say

By Vincent Nwanma
Posted on Thursday, 4 November 2021 08:17

Nigeria Floating Currency
A money changer counts Nigerian naira currency at a bureau de change, in Lagos Nigeria. (AP Photo/Sunday Alamba)

Clearing unmet demand for dollars would go a long way to helping Nigeria escape from the prospect of a further currency devaluation, analysts and executives say.

“Rather than devalue the naira further, the authorities need to work on addressing market confidence, which may start with clearing of demand backlog, both from foreign investors and manufacturers,” says Abiola Rasaq, former chief economist at UBA Group.

Nigeria has an official window for foreign currency transactions where the naira is priced much higher against the dollar than on the black market. The authorities have sought to support the official rate with a range of restrictions on dollar demand, and in July, it ended the sale of forex to bureau de change operators.