Naira could be devalued to N520/$ by 2023 — Bank of America



By Editor



October 19, 2022




The Bank of America has projected that the official exchange rate could likely be devalued to N520/$ in 2023 because it is well above fair value.  

This was disclosed by Bank of America Economist Tatonga Rusike, in a note to clients seen by Bloomberg.   

As you may know, the Central Bank of Nigeria’s (CBN) foreign exchange strategy has resulted in a significant premium between official and parallel market rates.

"As a result, the apex bank’s major move next year may be a devaluation to bridge the deficit", Rusike explained.  


According to Tatonga Rusike, the naira is 20% overpriced. And this is based on three indicators:

“currency fair value research”
Rusike said, “We see scope for it to weaken by an equivalent amount over the next six-nine months, taking it to as high as N520 per USD.”

In the meantime, devaluation of the naira is unlikely to happen until after the February 2023 presidential elections, the bank said.


"This is despite the fact that the naira will likely come under increasing pressure “due to limited government external borrowing”,Rusike added.


The bank also warned that “the greater the disparity with the official market, the higher the likelihood of increasing excess demand for foreign currency on the parallel market”. 

 
The exchange rate between the naira and the US dollar at the I&E official window has been fluctuating around N440 to $1, while it trades around N742 to $1 on the black market.  


Nigeria’s foreign reserves have been declining due to the CBN’s ongoing intervention in the official market trying to maintain the stability of the local currency. 

The Association of Bureau De Change Operators of Nigeria (ABCON) had earlier blamed the apex bank for the significant difference between official and secondary market rates.  

According to ABCON, the naira has lost significant value against the dollar since the CBN stopped selling currency to Bureau De Change (BDCs) operators in July 2021.




 


Comments

Post a Comment

Popular posts from this blog

Corruption allegation case: Federal High Court orders service of summons on Gov Obaseki

Image
------ Adjourns case to March 19 By Editor March 6, 2024     The Federal High Court in Abuja, on Wednesday, gave an order for the Attorney General of Edo State, Oluwole Uzzi, to receive the court originating processes on behalf of the Governor of Edo State, Mr. Godwin Obaseki in a corruption-related caze. The case with suit number FHC/Abj/CS/./2023 was filed by Adaze Andrew Emwanta, Esq., against the Inspector General of Police, Obaseki and there others. DailyMonitorngr recall that in August 2023, Obaseki had through his lawyers written to Emwanta, the former commissioner of Information and Orientation to the governor that he was going to bring civil and criminal charges against him if he did not do a retraction of a media interview on AiT Democracy Today TV programme. Dailymonitorngr reports that in the interview, Governor Obaseki said  the his former aide alleged that he had interest in Azura power plant. Obaseki’s lawyers in their letter to Emwanta made several deduction
Read more

Edo Guber 2024: Come home to liberate us, group appeals to Federal Permanent Secretary

Image
Dr Ernest Afolabi Umakhihe By Editor Dec 19, 2023 A group under the aegis of  Concerned Edo Citizens Forum (CECF) has called on Dr. Ernest Afolabi Umakhihe the outgoing Permanent Secretary, Federal Ministry of Agriculture and Food Security, to the join the race for the 2024  governorship election in the State to liberate it from the shackles of oppressive leaders. Dailymonitorngr reports that the group noted that the state had over the years been governed by oppressive leaders. The group at a press briefing in Benin City on Tuesday appealed to the Permanent Secretary to accept the patriotic call to serve father land. Addressing the press, the state Coordinator of the group, Endurance Dirisu and the Director, Publicity and Mobilization,  Comrade Felix Osas Osagie, noted Afolabi Umakhihe has the requisite criteria and also rich in experience  in public sectors that can galvanize the state to a greater height. Dirisu who described the permanent secretary as a home boy, noted t
Read more

Fight insecurity, high cost of living, not Shaibu's impeachment

Image
By Editor March 6, 2024 The Coalition of Registered Political Parties (CRPP) in Edo state has advised Governor Godwin Obaseki to channel his energy to fight insecurity and high cost of living in the state instead of planning impeachment against his deputy, Philip Shaibu. Dailymonitorngr reports, the group gave the advice at its emergency congress held in Benin City on Tuesday. A statement signed by Dr Samson Isibor, chairman and Barrister John Isidhaome, Secretary respectively was made available to newsmen. "Edo State has been at a standstill for the past 8 years without any physical development. Edo State needs peace to progress.  "He should face the insecurity in Edo State where Fulani headsmen have taken over  almost all our forest kidnapping on daily basis. "Edo state is one of the states in Nigeria with the high cost of living which is making life unbearable for the masses. Imagine a sachet of water being sold for N5O. The cost of food items in Edo State
Read more