By Gbenga Abulude
The Central Bank of Nigeria (CBN), recently adjusted the official exchange rate of the naira to the dollar on its website from N361 to N379.
The recent devaluation of the naira will increase the debt profile of the country and banks in naira terms apart from other side effects, experts have said.
Professor of capital market at Nasarawa State University, Professor Uche Uwalaka, explained to journalists that a negative side effect of the devaluation was that it would shrink asset values in dollar terms.
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Uwalaka said, “Devaluation of the naira will affect the global ranking of banking and capital market institutions.
“Banks that have borrowed in dollars from foreign institutions will be in more trouble. Our public debt stock will also rise in naira terms.”
In the short term, he said, the implication of the devaluation was that it would likely hurt the economy and bring some pains to most Nigerians given the country’s dependence on imports and over reliance on oil revenue.
Also, former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said many companies were already suffering from the effect of the pandemic, and by the time they imported, the cost would be high.
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He observed that more naira would be needed to repay loans in dollar terms.
“If you have to convert from naira to dollar, then a lot of naira would have gone to procure the dollar than when the exchange rate was lower,” he added.
