In a note to all his clients, Johannesburg-based Mhango said that he saw no relief to the dwindling currency in the current year. He indicated that the reversal of cash inflow and a subsequent low foreign-exchange reserve would lead to a sizable, uncontrolled depreciation of the nation’s currency.
Nigeria’s policy and decision makers, who rely on crude oil for an estimated whopping 90% of export earnings and 70% of revenue, have negatively reacted to oil prices that have more than halved since June of 2014. This has resulted in massive spending cuts and corresponding increases in local interest rates to an unprecedented 13 percent. The naira has bottomed out by a whopping 13% in the past three months alone, which is the most among 24 African currencies tracked by major financial institutions.