"We Expect": UK Firm Sets New Exchange Rate For The Naira Against Dollar

"We Expect": UK Firm Sets New Exchange Rate For The Naira Against Dollar

  • The Economist Intelligence Unit (EIU) has predicted a new exchange rate for the naira against the dollar
  • The EIU said the naira is expected to converge at N884 per dollar at the official market
  • Per the research firm, the Dangote refinery is expected to help ease petrol imports in Nigeria

Pascal Oparada has over a decade of experience covering Tech, Energy, Stocks, Investments, and Economy.

The research and analysis firm, the Economist Intelligence Unit (EIU), has predicted a new exchange rate for the naira against the US dollar in the coming year.

The company stated that Nigeria's currency's new forecasted FX rate should be effective from an estimated N848 to one US dollar at the end of 2024, marking a period of relative stability, stating that the parallel market rate may likely remain volatile.

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EIU, CBN, FX rates
The Economist Intelligence Unit forecasts new exchange rate for the naira Credit: Bloomberg/Contributor
Source: Getty Images

Naira to officially stabilise at N884 per dollar

The EIU's estimate is for the official rate as directive by the Central Bank of Nigeria (CBN), which has pegged the currency at N887 to a dollar.

The company explained that despite market reforms hurriedly implemented by the Nigerian government in June this year to restore normalcy and reduce the pressure on the naira, the CBN is unlikely to clear the Forex backlog blamed for naira's woes entirely.

The EIU predicted that the pressure on the naira would ease in 2024 without CBN implementing harsh measures.

It said:

"Foreign exchange rules being introduced and the possibility of an oil-backed loan could reassure investors and allow the backlog to be entirely cleared. A current account surplus will be another support. The political need for currency stability would probably preclude a functioning managed float."

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BusinessDay quotes the EIU as stressing the impact that oil production from the Dangote Refinery could have on creating a current account, causing a surplus.

Dangote refinery to provide relief to petrol import

EIU stated that immediately after the prediction for the Dangote refinery comes true, petrol imports should cease from 2025, giving the CBN a freer hand to attempt another convergence of the Forex market, taking the exchange rate to N1,162 per dollar by year-end.

The EIU report predicted that CBN might struggle with inflation as it needs to gain experience managing monetary policies with a floating exchange rate.

The report said that by 2028, it expects an exchange rate of N1,283 to a dollar, with a wider margin at the parallel market.

Naira sinks to an all-time low at the official market

The EIU report comes as the naira fell to its lowest in history at the official Nigeria Autonomous Foreign Exchange Market (NAFEM) on Friday, December 8, 2023.

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After receiving its first supply, Dangote Refinery announces arrival date for next cargo

The naira plunged to its lowest at N1,099.05 to a dollar, the weakest in its history at the Forex market, a Legit.ng report said.

Legit.ng reported that the exchange rate gap or disparity between the official and parallel market closed to N99 per dollar as the naira depreciated to the lowest in history.

CBN sends strong message on naira scarcity as Nigerians battle cash crunch

Legit.ng reported that as Nigerians battle near acute naira scarcity, the Central Bank of Nigeria (CBN) has said there is an adequate supply of currency.

The apex bank gave the assurance following the complaints by bank customers on the scarcity of banknotes at counters, ATMs, PoS, and Bureau de Change (BDCs).

A statement by the bank's Corporate Communications Department said there is no shortage of banknotes, stating there is enough for economic activities in the country.

Source: Legit.ng

Authors:
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Pascal Oparada (Business editor) Pascal Oparada is a Mass Communications Graduate from Yaba College of Technology with over 10 years of experience in journalism. He has worked in reputable media organizations such as Daily Independent, TheNiche newspaper, and the Nigerian Xpress. He is a 2018 PwC Media Excellence Award winner. Email:pascal.oparada@corp.legit.ng

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