Economics
Black-Market Attack Is Just a Stopgap Until Nigeria Floats
- Web of alternative exchange rates conceals naira’s real value
- Rally spurred by central bank decision to sell more dollars
Nigeria's currency, the naira.
Photographer: Suzanne Plunkett/BloombergThis article is for subscribers only.
Don’t be fooled by the biggest black-market gain in a year for Nigeria’s naira.
The rally, sparked by increased sales of foreign-exchange forwards and looser capital controls, is contingent on the central bank continuing to sell down its reserves. And until it devalues or makes a clear switch to a free-floating currency, Africa’s most-populous country will struggle to lure back foreign investors, according to JPMorgan Chase & Co. and Renaissance Capital.