The Nigerian naira is expected to decline to N1,621.7 to the US dollar by the end of the year despite the Central Bank of Nigeria (CBN) ‘s efforts to stabilize it.
However, the Stears macroeconomic prognosis for Nigeria downgrades the earlier projection of N1,571.7 against the US dollar for the final three months through December.
“As we approach the end of the year, we anticipate that currency pressures will persist unless the CBN makes significant interventions. In Q4 2024, we expect the naira will trade at N1,621.7/$ in the official market, up from our earlier projection of N1,571.7/$,” the report noted.Â
The naira’s 3.7 percent gain in September was eroded by a stunning 8 percent depreciation in October, which caused the local currency to move from the best-performing to the worst month-over-month, according to the financial data collection organisation focusing on Africa.
The naira fell 2.5 percent on the parallel market, it was stated, reaching a record low of N1,750/$ and maintaining the market premium at a high of 7% in October.
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.
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.
The CBN raised key interest rates to 27.50 percent from 27.25 percent after this year’s most recent monetary policy committee meeting. This tightening cycle is the longest since the CBN Act was reenacted in 2007 and reflects the urgent need to stabilize prices and protect the currency.
As we approach Yuletide, analysts anticipate that the top bank will contain the currency risk by intervening in the market in its customary manner.
