Faltering crude oil prices have put the nation’s local currency, the 2018 budget implementation and the fragile economic growth on a crisis path. Already, the near-convergence of all rates at N360/$, except the official exchange rate of the Central Bank of Nigeria (CBN), has been distorted, with each creating a wide gap, as the parallel market settles for N366/$.
Also, the CBN spot rate lost 0.02 per cent (5 kobo) to close at N306.85/$, while in the investors and exporters FX Window, the naira lost N1.06 to close the week at 365.16/$. Yesterday, Brent Crude price sustained a renewed volatility at $58.96 per barrel, even as a ready-made market for the product remains uncertain, sending a disturbing signal to the foreign exchange market.
Nigeria’s 2018 budget, at over N9 trillion, benchmarked crude oil price at $51 per barrel. But with reported shut-ins, leaving it at around 1.94 million barrels per day (mbpd) against the projected 2.3 million mbpd and the dwindling prices, projected deficits will widen. Unfortunately, the ensuing exchange rate differential would reintroduce imported inflation and huge distortion on price stability, worsening the economic growth projection currently at 1.9 per cent, which the budget earlier put at 3.5 per cent.
Source: The Guardian