Following Fitch Ratings’ pessimistic prediction that the local currency would end the year at N1450 in December 2024, the value of the naira plunged on the foreign exchange market.
Amidst allegations that the local currency is drastically undervalued, the projection was made. Additionally, it defies the forecasts of other bulls of the naira, like Renaissance Capital, Goldman Sachs, and Financial Derivative Company, who all predicted that the naira would settle at N1000 or less.
Based on statistics from FMDQ Securities Exchange for daily prices, the naira declined by 0.8% to N1,488.60 per US dollar during the official window on Wednesday.
SAMTL attributes naira depreciation to the waning effects of CBN interventions in the FX market. Oil prices rebounded slightly as the OPEC+ decision to increase production later in the year continued to weigh on the market. Fitch Ratings projected that the exchange rate will average about N1200 per US dollar this year and end the year at N1450 per US dollar.
“And in terms of next year, we see a gradual depreciation, but it also depends largely on the momentum of the foreign exchange reforms, a Fitch analyst said at a webinar. In April, Goldman Sachs updated its position on the naira, saying the local currency could extend gains to trade below N1,000 to the US dollar.
In an interview with Bloomberg, Andrew Matheny, an economist at Goldman Sachs, said the greenback could further trade below the projected N1,200. Recall that the investment firm had predicted that the naira exchange rate would close in 2024 at N1,200.
But rapid gains in the official window saw the exchange rate breach the ceiling, and draw close to the 1000/$ level before it reversed the trend.
