Naira Slides to N580 Against British Pound, Remains Under Pressure

Naira continues its downward trend against global counterparts this week as the Central Bank of Nigeria fails to up forex liquidity.

On the parallel market, popularly known as the black market, the local currency exchanged at N580 to a British Pound, represents N4 decline from N578 it traded on Wednesday.

This decline continues against the Euro single currency as the Nigerian Naira remained under pressure at N530, its lowest against the European common currency in years.

The Naira has been under pressure since global oil prices plunged below $100 per barrel in 2014 under the previous administration.

However, failure to diversify the economy despite years of oil exportation has left Africa’s largest economy grappling for survival each time oil prices took a hit in the global market.

Nigeria, an oil-dependent economy, has had to depend on borrowing to fund most of its budget year after year, leading to high debt service-to-revenue ratio of 99 percent. One of the highest in the world despite having one of the lowest debt to GDP ratios in the world.

The International Monetary Fund (IMF) recently said Nigeria does not have a debt problem but a revenue collection issue. The IMF explained that at about 7 percent tax-to-GDP ratio, the nation has one of the lowest tax-to-GDP ratios in Africa and the world at large.

While advising against raising tax during this tough period of COVID-19, the Fund advised the Federal Government to improve revenue collection efficiency to ease rising debt burden and increase economic activities.

Naira’s outlook remained weak in 2020 and expected to remain largely under pressure for the most part of 2021, going by Investors King’s projection and available economic fundamentals.

Meanwhile, the Naira exchanged at N388 to a US dollar on the Investors and Exporters Forex window on Thursday as turnover volume traded by investors plunged to $12.61 million.

The central bank official rate for investors and exporters remain N381, raised from the previous N361/$.