Report Gives New Naira Prediction for 2024 as Currency Becomes Worse-Performing
- It is anticipated that the Nigerian naira would continue to fluctuate, ending the year at N1,621.7 to the US dollar
- This represents a downgrade from the earlier N1,571.7 against the US dollar based on Stears' macroeconomic outlook
- It stated that the local currency went from being the best-performing to the worst month after month
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Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
Although the Central Bank of Nigeria (CBN) has intervened to support the currency, the Nigerian naira is expected to end the year declining to N1,621.7 to the US dollar, continuing its volatility.
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This new outlook is a downgrade from the previous forecast of N1,571.7 against the US dollar in the last three months through December, according to Stears' macroeconomic outlook for Nigeria.
“As we approach year-end, we foresee currency pressures lingering, barring any substantial interventions from the CBN. In Q4 2024, we forecast the naira to trade at N1,621.7/$ in the official market, above our previous forecast of N1,571.7/$,” the report stated.
According to the Africa-focused financial data collection business, the naira saw a significant 8 percent depreciation in October, eroding its gains of 3.7% in September.
BusinessDay reported that this caused the local currency to move from the best-performing to the poorest month-over-month.
In October, the market premium remained high at 7% despite the naira depreciating 2.5% on the parallel market, reaching a record low of N1,750/$.
Lower currency supply is the main cause of the naira's pressures, as shown by the average daily turnover at the NAFEM window, which dropped fourfold from $359 million on October 21 to $81 million on October 29.
This is in spite of Nigeria's foreign reserves continuing to rise as the market waits for a comprehensive plan of authorized external borrowing totaling $2.2 billion. According to CBN data, foreign exchange reserves continued on their upward trajectory, with the gross reserve level increasing by USD 2.24 million week over week to USD 40.28 billion.
As year-end draws near, demand for foreign exchange rises for a number of reasons, such as travel and stockpiling for the holiday season.
The naira was quoted at N1,675.62 on Monday, according to data from the FMDQ securities. This was higher than anticipated, but the weakened currency is anticipated to move when the monetary authorities hike rates by a quarter percentage points.
Naira bounces back in official window
Legit.ng reported that the naira’s value improved by 0.97% in the official window on Tuesday, November 26, 2024, after CBN extended the deadline for Bureaux De Change Operators to recapitalise.
On Tuesday, November 26, 2024, the naira traded at N1,659.44 per dollar from N1,675.62 on Monday, November 25, 2024.
Data from the FMDQ Exchange indicates that traders in the forex market staked $425.95 million as turnover, leading to improved supply in the official window.
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