Nigeria 'bows to pressure to devalue currency'

For months, Nigeria has been in the grips of a severe foreign currency shortage.  As oil prices plummeted so did the country’s foreign currency earnings meaning there was less cash to pay for imports. Unlike other major petroleum producers – such as Russia – Nigeria refused to devalue its currency. The country’s president wanted Nigerian businesses to make what they could not import. He wanted to diversify the economy away from the oil industry.  But that policy led to widespread shortages of raw materials, machine parts, and supermarket products.

The new exchange rate will be welcomed by businesses that were forced onto the black market in order to pay for their imports. On occasions they were paying almost double the official rate for dollars. Foreign investors may also be tempted back as they will get more value for their money.  But the new exchange rate is likely to push up already high inflation. And that will hurt tens of millions of Nigerians who live in abject poverty.