All eyes may have been on the rouble this week, but Nigeria is suffering its own currency crisis. The naira has been battered by steep budget cuts, corruption scandals and diving oil prices. David Pollard reports.
Far from Russia's icy steppes, somewhere rather hotter is experiencing a currency crisis of its own. Nigeria's naira has slumped. And that's despite central bank efforts to shore it up. The latest bars commercial banks from holding their own funds in dollars - that's to try to end speculative pressure. But it doesn't appear to be doing the trick. The naira has fallen to a new record low. The main pressure it faces is just the same as Russia's, says David Stubbs, global macro strategist at JP Morgan Asset Management. (SOUNDBITE) (ENGLISH) DAVID STUBBS, MARKET STRATEGIST, JPMORGAN ASSET MANAGEMENT, SAYING: ''If you look at Nigeria, if you look at Russia, obviously this is an oil effect. It's an extreme one, one that's very destabilising for the economy and there's going to be real troubles there.'' The fallout will be felt here on the street. Nigeria is heavily dependent on imports. With the currency going down, the price of foreign goods goes up. This trader has already tried to raise his own prices to compensate - but says his buyers just won't buy. (SOUNDBITE) (English) IFEANYI ONUCHUKWU, TRADER SAYING: "It's quite, it's mad, everybody is crying and complaining and it really affected a lot of things." And more price pressures could be in the pipeline. Right throughout the supply chain, according to economist Henry Boyo. (SOUNDBITE) (English) HENRY BOYO, ECONOMIST, SAYING: "You can expect that there will be at least a twenty percent increase in production cost, and since these manufacturers are not philanthropists or charitable organisations they will have to pass on this cost to the consumers." There are wider concerns too. Russia's rouble and Nigeria's naira have slumped on falling oil prices. And along with other emerging markets, they could face other challenges in 2015. (SOUNDBITE) (ENGLISH) DAVID STUBBS, MARKET STRATEGIST, JPMORGAN ASSET MANAGEMENT, SAYING: ''Going forward, emerging market currencies are going to face the headwind of a strengthening US dollar, we think that that's just in the beginning of a few years of appreciation of the US dollar. And, of course, when the Fed starts to raise interest rates around the middle of next year, that could also be a challenge for some emerging market economies that are running current account deficit who require funding to cover that.'' And that's not such good news for incumbent Goodluck Jonathan or opposition Muhammadu Buhari as they prepare for a presidential election on February 14.