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Agbaje foresees naira devaluation

By on August 27, 2015

The Managing Director/Chief Executive Officer of Guaranty Trust Bank Plc (GTBank), Mr. Segun Agbaje has said that the Central Bank of Nigeria needs to devalue the naira, adding that the falling oil prices and the global markets rout this week means the currency’s exchange rate is unsustainable.
“There’s only one way the currency can go,” Agbaje said in a conference call on Tuesday.
“As a country, we have to make the difficult decision. At the current oil price and with what’s happening in the world, we’ll have to deal with some measure of devaluation,” Bloomberg quoted him to have said.
A devaluation of about 10 per cent against the dollar would be enough for the naira to “settle,” he said.
The central bank of Africa’s biggest economy and oil producer introduced curbs on currency trading after the naira fell to a record low of N206.32 per dollar on February 12. That stabilised the unit at an average of N198.94 since the start of March and left it overvalued, according to investors including Ashmore Group Plc and Aberdeen Asset Management Plc.
In June, the Abuja-based regulator also stopped importers of 41 items including furniture and textiles from accessing official foreign-exchange markets in a further bid to prop up the currency.
Agbaje said local bond yields may rise by 100 to 200 basis points as the government boosts its borrowing to make up for a shortfall in oil revenues, which make up about two-thirds of state revenue. He didn’t specify a time period for the potential market movements.
Also, Reuters also quoted Agbaje to have said GTBank will redeem its existing Eurobond at maturity and consider issuing a fresh one.
“We probably will redeem everything, but we might raise fresh bond … subject to pricing, prevailing environment,” he added.

 

[ThisDay]