Moody's hails Nigeria devaluation as 'positive step'

By Rafiu Ajakaye

LAGOS, Nigeria

Nigeria’s devaluation of the local naira currency is a “positive step” that should help attract foreign investments and stabilize its economy, ahead of a possible recovery from recession next year, global credit ratings agency Moody’s said in a report Friday.

“Moody’s views the recent [May 24] devaluation of the naira as credit positive. The new system should enable the naira to better absorb external shocks over time, and dollar availability should gradually increase,” Moody's said in a new report.

The agency said it expects inflation to hit 18 percent by year’s-end, before falling to around 12.5 percent in 2017.

“Moreover, the fiscal benefit of the depreciation and the current oil price (which is above the budgeted oil price) exceeds the loss in oil output,” added Moody’s.

Oil output has plummeted amid attacks by the militant Niger Delta Avengers.

Moody's also suggested that Nigeria might emerge from recession next year, days after the country's bureau of statistics confirmed that the economy has slid into recession following consistent shrinking of its GDP over two quarters.