FG Set To Make Naira Stronger As Expert Predicts New Exchange Rate
- The federal government is determine to sustain the economy growth and especially performance of the naira.
- The latest move is the planned issuance of $2.3 billion Eurobond towards the end of the year, a decision expert believes will make naira stronger
- Analysts have shared their expectations for the naira and believe the exchange rate could fall to N1,400 a dollar
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The naira in the last few months has appreciated and officially no longer in World Bank least of worst performing currency in Africa.
To sustain the rally, the federal government has planned the issuance of a $2.3 billion Eurobond towards the end of the year.
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Mohammed Sani Abdullahi, the Central Bank of Nigeria’s Deputy Governor responsible for Economic Policy who disclosed the Eurobond issuance plan during the World Bank and IMF Annual Meetings said the funds will be used to repay a $1.18 billion Eurobond that becomes due in November, while the rest will help strengthen the country’s foreign reserves and sustain investor trust.
Abdullahi stated:
“We plan to issue Eurobonds of roughly $2.3 billion to partly refinance the $1.18 billion Eurobond maturing in November.”
Expert explains impact of Eurobond on naira
Analysts have shared their opinions on the government plans and they believe it will enhance foreign exchange liquidity, reinforce investor confidence.
Commenting on the development, Ayokunle Olubunmi, head of financial institutions ratings at Agusto & Co., said the planned Eurobond issuance is primarily aimed at refinancing maturing obligations.
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He noted that it would help moderate the impact of the due Eurobonds on reserves and ease concerns about exchange rate stability, BusinessDay reports.
Also, Adebowale Funmi, head of research at Parthian Securities, said the issuance will have mixed implications.
In the short term, she said, the inflow of funds will boost reserves and support the naira by improving FX liquidity, helping the CBN manage volatility and stabilise the exchange rate.
The proceeds will also help finance part of the 2025 budget deficit and reduce pressure on domestic borrowing.
However, Funmi warned that in the future the move would increase Nigeria’s external debt and debt service obligations, adding exposure to exchange rate risks.
Analysts predict new exchange rate
Earlier, Legit.ng reported that analysts have predicted that the naira would end the year between N1,400 and N1,450 per dollar as Nigeria’s inflation falls.
CardinalStone Research disclosed in its macroeconomic update that it anticipates the fall in inflation to boost the Nigerian currency.
Stressing the inflation effect, CardinalStone stated that the ongoing reduction in inflationary trends is good for the naira.
It revealed that combined with a sustained current account surplus and a steady rise in external reserves, the trend is expected to boost the naira’s value.
“We project FX to close the year within the range of N1,400.00/$-N1,450.00/$.
Source: Legit.ng
