Naira devaluation will raise debt profile - Experts

Business: Bureau De Change operators exchanging dollar to naira
Emeh Joy

Experts have said that the recent devaluation of the naira amongst other side effects, would lead to an increase in debt profile of the country and banks within the nation.

The Central Bank of Nigeria recently adjusted the official exchange rate of the naira to dollar on its website from N361 to N379.

a Professor of capital market at Nasarawa State University, Professor Uche Uwalaka has said that the negative side effect of devaluation is that it would shrink asset value in terms of the dollar.

"This will affect the global ranking of banking and capital market institutions. Banks that have borrowed in dollars from foreign institutions will be in more trouble. Our public debt stock will also rise in naira terms", he said.

He said that the short term effect of devaluation is that it would likely hurt the economy and bring pain to some Nigerians as the country depends on imports and relies much on oil revenue.

Also, a former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, stated that several companies were suffering from COVID-19 effect, and by the time they imported, the cost would be high.

"If you have to convert from naira to dollar, then a lot of naira would have gone to procure the dollar than when the exchange rate was lower", he said.

He also noted that more naira would be needed to repay loans in dollar terms.

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