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Devaluation Looms for Nigeria Even as Forwards Ease on Oil

  • Six-month forwards decline to lowest in more than 3 months
  • Crude gain doesn’t eliminate need for devaluation: Duet Asset
Updated on

The Nigerian naira’s recovery in the forwards market may be deceptive. The currency is destined to weaken, however long policy makers hold out.

Six-month contracts declined to their lowest level since September last week as crude oil, Nigeria’s top export, advanced about 20 percent after OPEC agreed a production cut in November. A drop in forwards would typically be a sign of growing confidence in a nation’s economy and currency, but not this time. Even as oil prices advance, Standard Chartered Plc and London-based Duet Asset Management say the nation needs to devalue the naira and loosen capital controls.