The Coronavirus and plunge in oil price is already taking a toll on the Naira, as the Nigerian currency fell in value against the US dollar.
This is just as economists are warning that the panic buying in the parallel market could lead to a total collapse of the Naira, which could itself trigger a rise in interest rates and a possible economic recession by the middle of the year.
The value of the naira on Thursday continued to fluctuate as bureau de change operators in Abuja exchanged every $1 for N385, but a little less than the N390 it sold for on Wednesday.
With the price of oil continuously falling for the last few days, Brent Crude is now priced at $33.35 in the international market.
Oil accounts for 70 per cent of Nigeria’s foreign exchange earnings.
The outbreak of the Coronavirus on the other hand has already led to loss of revenue with many economist expressing fears of a recession.
Nasiru Sani, a bureau de change operator in the popular Wuse, Zone IV in Abuja told the Interview they buy $1 for N380, while it is sold for N385.
He said $1 was sold for N390 on Monday,
Odilim Enwegbara, a development economist, told The Interview that the fall in the value of the Naira and oil price oil meant the whole budget would have to be adjusted.
The government, he said, will have to do away with its planned capital expenditure and just focus on recurrent expenditure; paying salaries and other things.
“Imagine what will happen if our foreign reserves is drawn to a very dangerous level? There will a recession probably by July. And because the global economy is also heading towards a recession, most of the developed economies will not be able to give Nigeria financial support.”
