To prevent devaluation and keep the naira competitive against the dollar, Nigeria would have to achieve a high threshold in its external reserves, Ayo Teriba, CEO, Eco Associates has recommended.
“If we have a high level of external reserves, the exchange rate will be stable, Teriba said on Friday.
Giving a presentation at the second private equity summit by Udo Udoma & Belo-Osagie, Teriba said Nigeria now has the highest number of poor people in the world because of devaluation.
“Nigeria’s external reserves used to be as high as $600 billion but it is now below $400 billion,” he said with assurance that if the country’s reserves becomes high, the local currency will be strong again.
Industry analysts have forecasted that the central bank will devalue the naira in 2020 amid falling external reserves.
The country’s foreign reserves dropped by $4.45 billion from the $43.07 billion recorded in January 2019 to $38.61 billion in December 2019, a Central Bank of Nigeria’s data revealed.
Citing the example of Saudi Arabia, Teriba said Nigeria would have to grow its reserves like the oil-producing nation whose exchange rate has remained unchanged in the last decade.
