The Nigerian central bank has removed trading restrictions on the official market, which led to the Nigerian currency Naira dropping to a record low of 750 to the US Dollar, down from June 13th low of 477 Naira to the US Dollar. This move comes after Bola Tinubu, President of Nigeria suspended the central bank governor who oversaw much criticized multiple exchange rates.

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This was the first time since 2016 that the Naira had recorded a big fall on the official market before the central bank introduced a managed exchange rate in 2017.

This poses a setback for Bharti Airtel as 50 percent of company's earnings before interest, tax, depreciation and amortisation (EBITDA) is contributed by Nigeria. HSBC in a report in May 2023 valued Airtel’s Africa operations at Rs 32 per share.

Airtel Africa had earlier guided that 1 percent devaluation in Nigerian Naira could lead to $22 million impact on revenues, $12 million impact on EBITDA and $7 million impact on finance costs. The Naira had weakened against the US Dollar across all the segments of the foreign exchange market. Naira weakened by 29 percent against the US Dollar. Several reasons why the Naira has weakened are the fall in oil prices and forex reserves along with foreign direct investment flows. Alongside, there has been a fall in remittances from Nigerians abroad and the Covid pandemic, among others.

At 11:30 am on June 16th, the stock is trading flat on the exchanges at Rs 828 per share.

First Published:Jun 16, 2023 9:11 AM IST