Naira Trades Farther From JP Morgan’s Expectation as Market Gap Widens by N354/Dollar

• Naira depreciated on the official market on Tuesday, compared to the previous day’s record
• A similar trend was witnessed in the unofficial market, which closed at N1,220 against N1,205 the previous day
• The disparity between both markets continues to widen to record N354.97/$ as of the day’s close

Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.

The naira closed at N865.03/$ on Tuesday, December 12, 2023, from N864.29/$, drawing farther from JP Morgan’s earlier prediction by year-end.

Legit.ng earlier reported that JPMorgan Chase & Co predicted that the naira to US dollar would close the year at N850 in the foreign exchange market.

With a 0.09% depreciation by the close of business on Tuesday, official Nigerian Foreign Exchange Market (NAFEM) data showed an intraday high of N1,186/$ and N720 intraday low.

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In the unofficial market, however, a similar trend was observed. The naira depreciated to N1,220 compared to the N1,205 it closed the previous day.

This means that the disparity between the official and unofficial rates has further widened from N340.71 per dollar on Monday to N354.97 per dollar on Tuesday.

FMDQ data further shows that daily turnover amounted to $99.09 million, representing a 25.19% decrease compared to the previous day. 

Analyst expects further fall

According to a Vanguard report, Afrinvest analysts expect the decline to continue across all market segments for the week.

He said:

“This week, we expect rates across FX segments of the market to diverge on the back of lingering demand-supply imbalance.”

In the view of Charles Abuede, a financial analyst, the level of volatility in the foreign exchange market will wield major impact on the naira as the new year emerges.

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According to him, JP Morgan's expectation for the Naira to close at N850 to the dollar is unattainable given the fact that demand pressure will persist within the last days of the year."

He said,

"In December 2023, the average FX rate between the Naira and Dollar is N900 and in the same vein, closed at N901.14 per dollar last Friday, December 15, 2023.

"We look forward to seeing a significant policy direction from the CBN to redirect the oscillation of the Naira in the positive territory. However, barring any market distortion that may trigger further pressure on the Naira, I think the local currency may close lower at around N900 per dollar."

Naira rises by over N200 against dollar, sets new exchange rate

Earlier, Legit.ng reported that Nigerian currency improved against the US Dollar on Monday, December 11, 2023, after falling to a record low at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

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Data from FMDQ securities showed that the naira closed on Monday at N864.29 to one dollar at the official market.

The Monday closing exchange rate represents a 27.16% increase or a gain of N234.76 from the all-time low of N1099.05/$ recorded last Friday, December 8, 2023.

Source: Legit.ng