Nigeria’s Economic Policies Too Loose to Support Naira, IMF Says
- Naira volatility likely to continue for longer period
- Interest rates need to be higher to bolster the naira
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Nigeria’s loose fiscal and monetary policies are creating excess liquidity, making it difficult for the naira to stabilize against the dollar two months after authorities allowed the currency to trade freely, the International Monetary Fund said.
Central bank transfers to the government are increasing the naira in circulation, depressing interest rates, discouraging savings and deterring the dollar inflows that could boost naira stability, said Ari Aisen, a resident representative for the IMF in Nigeria.