Indications have emerged that the Central Bank of Nigeria, CBN, is gearing up to respond to the deteriorating economic conditions following Naira’s steady fall against the dollar.
The apex bank, according to financial sources, recently conducted a stress test for banks to see if they can manage a Naira fall 500 per dollar, Reuters reports.
Brokerage firm Exotix even floated the idea of a fall to 1,000 per dollar to see whether Nigerian banks, which have borrowed heavily abroad, can survive this “worst case scenario”.
Actually, an anonymous Lagos-based industrialist said he had based his company’s 2017 budget on a possible rate of 1,000.
“It’s not unfeasible to see the exchange rate going to 550 per dollar but it will depend on FX liquidity conditions and in turn on how much external debt and investment inflows they can generate,” said Cobus de Hart, senior economist at NKC in Johannesburg.
However the CBN seems to be doing all in its power to keep the currency from drowning further. Recently, the apex bank banned several commercial banks, except First Bank, from selling dollars to Bureaux de Change operators.
