Naira makes gain against US dollar, as Bank of American predicts N520/$1 exchange rate

On Tuesday’s official market, the naira managed a modest rise versus the dollar but is still trading above N440.

According to information posted on the FMDQ website, where forex is officially exchanged, the currency started trading at N440.00 to the dollar but ended the day at N441.25.

The Naira has been trading at around N440, its lowest level ever at the official market, for the past week.

However, compared to the $46.21 million announced on Monday, the amount of foreign currency supplied to exporters and investors grew slightly to $74.33 million.

According to @naira rates, a Twitter account that tracks the black market exchange rates, 1 USD exchanged for N731.460 at the parallel market exchange rates.

After the general elections in 2023, the naira is expected to devalue by 20%, according to the Bank of America.
The international lender predicted that the local currency unit will lose more ground in 2019 since its dollar exchange rate is significantly higher than its fair value.

Three signs that the naira might collapse were mentioned by Tatonga Rusike of Bank of America Sub-Saharan Africa, The Economist, and others.

The naira is 20% overpriced according to the widely used black market rate, the central bank’s true effective exchange rate, and “our own currency fair value study.”

“We see scope for it to weaken by an equivalent amount over the next six-nine months, taking it to as high as 520 per USD,” Rusike said in a note to clients.

“While the naira will come under increasing pressure due to limited government external borrowing, devaluation is unlikely to happen until after the February 2023 presidential elections.,” BOE said.