The value of the naira against the dollar showed promising signs on Monday, starting at N1,130 in the morning and gaining strength by midday as traders anticipated another round of dollar sales to Bureau de Change (BDC) operators later in the week.
By noon on Monday, the naira was exchanging at N1,000 to the dollar in the parallel market. This marked a significant improvement from the previous week when the Central Bank of Nigeria (CBN) provided $15.88 million to BDC operators at N1,101 to the dollar, thereby boosting the value of the naira on the streets.
The CBN typically sells dollars to BDCs at rates quoted on the Nigeria Autonomous Foreign Exchange Market (NAFEM). Last Friday, the naira’s value ranged between N1,265 and N1,100 to the dollar.
With expectations of additional liquidity injection by the central bank, the naira, which had opened trading at N1,130 to the dollar on the parallel market, strengthened to N1,000 by midday.
These developments align with the predictions of US Bank Goldman Sachs, which anticipated over the weekend that the naira would reach N1,000. Goldman Sachs Group Inc. had earlier projected the naira to be one of the top-performing currencies globally.
Initially forecasting in February that the naira would strengthen to N1,200 per dollar this year, Goldman economists now believe it could surpass that level due to various measures implemented by the central bank. These measures include cumulative interest rate increases of 600 basis points during policy meetings in February and March, alongside other initiatives to alleviate local dollar scarcity, which had led to volatility and prompted companies to resort to the parallel market.
According to Goldman’s Andrew Matheny, “this probably can run further; we would see an extension of the move to 1,000 and maybe even sub-1,000. Six weeks have passed, and they’re continuing to hold the line, so that’s encouraging.”
Despite maintaining their 12-month forecast for the naira at 1,200 per dollar, the group acknowledges uncertainties surrounding the authorities’ ability to sustain the reform momentum, though they now perceive risks to that optimistic projection.
