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Nigerian central bank faces short-term debt hazards

Monday, July 1, 2019


Emefiele has vowed that the CBN will significantly increase financial inclusion, recapitalise banks and help the economy achieve double-digit growth over his second term. However, the significant amount of CBN bills in circulation, a key but costly component of the Bank’s recent exchange rate strategy, poses serious medium-term risks.


  • The CBN's continued focus on exchange rate stability leaves limited space for reducing interest rates over the short term.
  • Effective foreign currency yields of over 10% are appealing for portfolio investors, but a sudden naira slide would prompt major losses.
  • Significant divestment by foreign portfolio investors may make the CBN resort to temporary capital controls to limit damage to the naira.

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