A widening gap between the official and parallel market exchange rates of the Nigerian naira indicates the government’s lack of capacity to stabilize the currency and the likelihood it may depreciate further, according to Fitch Ratings.
The gap between the official and parallel market rates “highlights the challenges in sustaining exchange-rate liberalisation and raises the possibility of a further devaluation,” Fitch Ratings said.
The naira was quoted at 1002 per dollar at the parallel market on Wednesday, according to black market street traders. But it was 26% stronger at 745.19 naira/dollar in the official window, according to FMDQ, a Lagos-based platform where the currency is traded.
Newly appointed Nigerian central bank Governor Olayemi Cardoso, who lawmakers confirmed to the position last week, is yet to signal his policy stance, adding to the uncertainty.
Nigeria allowed its currency to weaken 40% against the dollar in June as part of reforms aimed at attracting foreign investment to help revive the struggling economy.