A report by Renaissance Capital, RenCap, an international investment and research firm, has shown that the volatility in the money market which has left the naira unstable will continue in the coming months.
According to the investment firm, the Nigerian currency, is expected to exchange for N390 to the dollar at the money market by the end of 2016.
RenCap’s Sub-Saharan Africa (SSA) Economist Yvonne Mhango, said the liberalization of forex markets on by the CBN led to positive sentiment in the equities market, with banks up by nine per cent since the plan was announced on June 15 .
However, she said sentiment risks being dampened by concerns around Brexit and the implications for the naira, as capital inflows may not materialize as rapidly as the CBN may have expected.
“We have used a N285/$ exchange rate in updating our models, but the risk is to the downside, and we see N390/$ by end of this year,” she said in a report titled: ‘Nigerian banks: Life after ‘40’, released yesterday.
For the banks, RenCap said it expects real loan growth to be minimal, but given that 46 per cent of sector loans were in forex in banks’ 2015 accounts, it estimates nominal credit growth post depreciation could end the year at 23 per cent on average.
