The poorest OPEC member has devalued its currency by a quarter

The national currency of Nigeria — Naira — June 20 fell by 24% after the decision of the Central Bank to abandon support for the course through the rapidly melting foreign currency reserves. On Monday, the dollar rose to naire c Friday values in 199 Naira per dollar to Naira’s record 264,5, and then by 15:11 GMT fell to a 260, 5 Naira’s.

As noted by Reuters, the black market Naira worth of about 325-345 per dollar against 355 Naira to the dollar on Friday, at the start of interbank trading.

The Central Bank kept the exchange rate since February last year, after a long period of the collapse of the Naira’s on the back of lower oil prices, while other oil-producing countries, including Russia, Azerbaijan, Kazakhstan and Angola, has released their national currency in the “free floating”. Until June 20, the trading band was 197-199 Naira per dollar. From 20 June the course will be determined in the interbank trading, to be attended by 10 banks.

As noted by Bloomberg, as the trading volume of Naira will continue to fall against the dollar and other currencies. The rate on the settlement forward contracts for a period of three years rose 0.3%, to 321 Naira to the dollar, a period of one year to 356 per dollar. The Central Bank promised to intervene if necessary.

19 June 2014, when a barrel of Brent cost $114,99, oil fell by more than half. Now it is trading around $50 per barrel.

Nigeria — Africa’s largest economy and the largest oil exporter on the continent is extremely sensitive to fluctuations in hydrocarbon prices on the world market. The oil and gas sector accounts for about 35% of the country’s GDP, it accounts for almost 90% of exports, it provides 75% of state budget revenues.

According to the International monetary Fund, the GDP growth rate of Nigeria has slowed from 6.3% in 2014 to 2.8% in 2015. Inflation rose from 7.9% to 9.6%, which is above the target medium-term level of the Central Bank of Nigeria in the range of 6-9%. The budget deficit has almost doubled, reaching 3.3% of GDP, despite significant reduction in public spending. The volume of exports fell by 40%, which led to a deficit of 2.4% of GDP.

The drop in export earnings was also influenced by the attacks of the militants of the movement “the Avengers of the Niger Delta” export terminals and pipelines last year, with the result that production fell to a low for the last 26 years. Before the start of the year, Nigeria was the largest oil producer in Africa, producing nearly 2 million barrels per day. By may, daily production fell to 1.42 million barrels.

In February the IMF published its recommendations on strengthening the Nigerian economy by the end of the mission in December 2015 and January 2016. The organization’s experts advised the authorities to refuse from the further containment of the weakening of the Naira’s. According to the IMF, Nigeria has the lowest GDP per capita among all the member countries of OPEC.