Rising crude oil prices and stable naira boost Nigeria

NIGERIAN officials are increasingly confident that the naira’s troubles are over for good. Some investors disagree. Portfolio inflows have risen in the past three months, with crude oil prices increasing to above $60 (R852.45) a barrel while money managers were taking heart from a new foreign-exchange trading window, in which the naira has converged with the black-market rate.

That prompted central bank governor Godwin Emefiele and Patience Oniha, the head of the nation’s Debt Management Office, to tell investors in London on October 27 that the currency was set to strengthen.

Finance Minister Kemi Adeosun concurred, saying on Thursday that the government sees no significant exchange-rate risk as it prepares to raise $5.5 billion of Eurobonds.

But Nigeria’s system of capital controls, its multiple exchange rates and the trading window known as Nafex would struggle to survive a drop in oil revenue or sentiment turning against emerging markets, which may come as the US Federal Reserve raises interest rates, according to investors, including Ashmore Group and Standard Life Aberdeen.