Naira devaluation inevitable in 2023: Top economist

The Nigerian currency is “misaligned from its true value”, and devaluation is inevitable next year, Bismarck Rewane, a top economist in the country, has said.

The naira has lost more than a quarter of its value against the dollar this year on the widely-used parallel market, trading at 740-750/$1 on Friday. This compares with 444/$1 at the official spot market.

“In 2023, exchange rate adjustment is inevitable” to narrow the spread between the parallel and official market rates, Rewane said in a presentation seen by Markets Reporters, titled ‘2022: An odd year that feels like a leap year’.

“The more the administrative controls in the forex market, the more the parallel market premium increases, leading to diversion of investment flows away from the market.”

He said currency pressures would linger as high global interest rates continue to stem capital inflows.

“Market efficiency is expedient for economic growth in 2023,” Rewane said.