The naira is now under pressure, according to the International Monetary Fund, and Nigeria is free to request a loan from the Fund to stabilize the currency if it thinks doing so is a wise move.
However, the Washington-based lender acknowledged that other actions made by the Nigerian government, including recent currency changes, were appropriate.
It also endorsed the Central Bank of Nigeria's decision last week to lift an eight-year foreign exchange embargo on 40 additional imports, including cement, rice, and poultry products. The forex embargo was enacted by the previous CBN government in 2015.
The IMF said that while the naira was still under pressure, inflation in Nigeria was still high, coming in at 26% in August. The IMF’s assessment was given during the World Bank Group/International Monetary Fund meeting in Marrakech, Morocco.
Following President Bola Tinubu's exchange reforms, the local currency dropped from around 450 to an average of 760 to a dollar, and it has since continued to decline on the black market. On Thursday, the local currency fell to 1045 per dollar.
The Central Bank of Nigeria's dollar responsibilities should be made clearer, the bank said, as it reiterated the need to tighten monetary policy by hiking the Monetary Policy Rate and clearing up excess naira liquidity.
The Central Bank of Nigeria's forward contract commitments were valued at $6.8 billion in a JP Morgan analysis, although others said that number might be higher.
Regarding the potential for a currency support loan, it was said that “As every member country of the IMF, Nigeria can seek IMF financing if they see this as helpful to address external imbalances. The Nigerian authorities have not approached the IMF with a request for financing.”
The IMF has stated that it believes the new CBN governor, Cardoso, as well as the new Minister of Finance and Coordinating Minister of the Economy, Wale Edun, have the ability to make wise decisions that would improve the economy's prospects.