Official, Black Markets Close Gap as The Naira Gains Against the Dollar, Analyst Predict New Rates
- The naira bounced back in the parallel market, trading at N1,430 per dollar from the N1,500 recorded on March 20, 2024
- The naira, however, lost 3.58% of its value in the official market to trade at N1,431 per dollar
- The development led to analysts predicting that the naira will finally rally at N1,200 per dollar
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Nigerian currency gained in the parallel market on Friday, March 22, 2024.
The naira gained two per cent from the N1,500 recorded on March 20, 2024.
Source: Getty Images
Bureau de Change (BDC) operators quoted the buying rate of the dollar at N1,430 and the selling price at N1,470 per dollar, leaving a disparity of N40.
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The naira drops 3.58% in the official market
However, at the Nigerian Foreign Exchange Market (NAFEM), the naira dipped by 3.58% to trade at N1,431 on Friday, March 22, 2024, from the N1,382 per dollar it traded on March 21, 2024.
Traders quoted the dollar at an intraday high of N1,468 per dollar and a low of N1,301 in the official market.
The development comes as the Central Bank of Nigeria (CBN) revealed on March 20, 2024, that it had settled all valid Forex backlogs.
This led foreign airlines under the aegis of the Association of Foreign Airlines and Representatives in Nigeria (AFARN) to ask the CBN to provide proof of payment to foreign airlines.
Naira’s gains come amid increased Forex inflows of $1.3 billion in February, as reported by the CBN governor, Olayemi Cardoso.
Financial experts believe the backlogs hurt the naira as investors have avoided the Nigerian economy.
Analysts predict N1,200 per dollar
The naira’s rebound signals a positive economic outlook, with analysts predicting that the local currency will rebound to N1,200 per dollar.
Economist, banker and financial analyst Frank Ijeh said the naira is poised to converge at N1,200 per dollar before the end of 2024, going by the current trajectory.
Ijeh stated in a chat with Legit.ng that the naira recovery was expected because it became the priority of the Nigerian government and the CBN.
“Many things were hinged on the recovery of the naira. Inflation, especially food inflation, was predicated on the performance of the naira against the dollar.
We will notice now that inflation might moderate as Nigerians can afford few things.”
UK firm predicts new naira to the dollar exchange rate in 2024
Legit.ng reported that the EIU said the projection is expected to rise to an average of 4.5% of GDP between 2025 and 2028, above the legal limit of three per cent of GDP, representing an unusual tax period for Nigeria.
On the Forex regime, the research firm predicted that the naira would depreciate to N2,381 per dollar, saying that the spread with the parallel market would be about five to 15%.
The EIU said continued high inflation, deficit monetisation, negative short-term accurate interest rates, low foreign reserves, and a backlog of foreign exchange requests would continue to drain confidence in the naira despite a 45% devaluation in February.
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Source: Legit.ng
