Tale of two currencies: Egypt sets itself apart from Nigeria
Lagos — Back in early November, Egypt and Nigeria were in the same situation, crying out for dollars to revive their sinking economies and trying to curb rampant currency-trading on the black market. Egypt’s tactic was to ditch a currency peg, leaving its pound open to market forces. The move helped secure a $12bn IMF loan for Africa’s third-biggest economy. This week, MD Christine Lagarde praised the government for restoring "economic sanity". Egypt is still short of dollars, but the situation is changing, and investors are gradually returning. Nigeria, in contrast, is not letting the naira trade at its market value, insisting that is the only way to protect the poor from a further surge in inflation, which is already at the highest level since 2005. Traders argue it has left the currency overvalued and say they will avoid Nigerian local markets until it weakens. While the government managed to issue a $1bn Eurobond last week, its first in almost four years, it is struggling to rai...
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