Top US Bank Predicts Exciting New Naira To Dollar Exchange Rate in 2024
- US-based investment bank Goldman Sachs has predicted a new exchange rate for the Naira against the dollar
- Goldman Sachs said the Naira is expected to rebound and close the year at N1,200 per dollar at the official market
- The Nigerian currency currently exchanges in the official and black markets above N1,600 against the US dollar
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Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Goldman Sachs has predicted that the Nigerian currency, the Naira, will appreciate against the US dollar and exchange at N1 200/$ in 12 months.
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This was stated in a Goldman Sachs' report titled Nigeria- Turning the Corner.
The investment bank explained that its positive outlook for the Naira is hinged on favourable real rates, capital inflows, and evidence of a shift to a more orthodox policy set-up.
The report prepared by Goldman Sachs analysts outlines that over the past nine months, the Naira has experienced a cumulative weakening of 60-70%.
However, it is expected that there will be a positive change for the Naira in the months ahead.
Part of the report reads:
"We think that Nigeria is turning the corner following its recent currency crisis.
“These developments have prompted us to shift to a constructive outlook for the Naira, which our FX strategists expect to appreciate to NGN 1,200 vs. the USD in 12 months.
“Nigeria is finally emerging from a period of monetary policy transition characterised by an absence of a credible policy anchor and deeply negative real interest rates
“We argued that addressing Nigeria’s currency and external liquidity crisis required positive real interest rates and capital inflows, conditions that were both present – at least in a limited form – for the first time last week on the back of the central bank’s monetary policy adjustments and bill issuance.
“In our view, this is the cue to turn constructive on the FX outlook, even if more decisive rate increases and confirmation of the policy shift are likely required to attract meaningful foreign inflows. This is especially the case given that, in the near term, inflation on our estimates is likely to rise further on the back of lagged currency depreciation, and given that real interest rates are still comparatively low relative to elsewhere (most notably Egypt, which is likely to be a beneficiary of large inflows on the back of recent policy adjustments).
“We think the Naira looks cheap on a REER basis in a historical context. Added to this, the current account surplus was +3.5% of GDP in 2023Q3, and we expect it to increase above +5.0% on the recent FX moves and associated import compression.
"We thus see reason for the Naira to be undervalued, and we see it appreciating to 1200 within the next 12 months.”
CBN policies to help Naira
In the last few weeks, the Nigerian government and the Central Bank of Nigeria have undertaken major measures and reforms to help the Naira recover against the US dollar in both the official and black markets.
Some measures include revoking over 4,000 Bureau De Change licenses, a clampdown on cryptocurrency online firms, especially Binance, increasing interest rates to attract foreign investors, and selling government securities for more dollar inflow.
While these measures have helped reduce the naira exchange rate from as high as N1,800/$ to around N1,600/$, it is still far off the budget dollar benchmark of N800 per dollar.
Pastor Adeboye predicts Naira will bounce back
Legit.ng earlier reported that Adeboye prophesied the possibility of the Nigerian currency bouncing back against the dollar with greater influence.
Adeboye revealed the prophecy at the RCCG's monthly Thanksgiving service on Sunday, with the theme 'Uncommon Miracles'.
According to the religious leader, there was a period when Nigeria's currency completely favoured the US dollar.
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Source: Legit.ng
